Obama Calls For Nearly Doubling Capital Gains Tax; Unaware Of Harmful Effects On The Economy And Reduction In Capital
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Yesterday, Obama Reiterated His Support For Nearly Doubling The Capital Gains Tax Rate; Claiming It Wouldn't "Distort ... Economic Decision Making":
CNBC's Maria Bartiromo: "He [Obama] wants to raise taxes. ... Right now, as you know, the cap gains tax is at 15%. He has yet to give us a specific number, how high he wants that number to go. He has said, and he told me today, that he won't go above 28%. So we are talking about the possibility of a doubling in the capital gains tax." (CNBC's "Closing Bell," 3/27/08)
Obama Said Raising The Capital Gains Tax Wouldn't "Distort ... Economic Decision Making." Obama: "I think that we can have a capital gains rate that is higher than 15 percent. If it--and if it, you know--when I talk to people like Warren Buffet or others and I ask them, you know, what's--how much of a difference is it going to be if it's 20 or 25 percent, they say, look, if it's within that range then it's not going to distort, I think, economic decision making." (CNBC's "Closing Bell," 3/27/08)
ECON 101: Higher Capital Gains Taxes Would Harm The Economy:
FLASHBACK: In 1963, John F. Kennedy Said That "The Tax On Capital Gains Directly Affects Investment Decisions." John F. Kennedy In 1963: "The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital ... the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy." (Editorial, "A Capital Gains Primer," The Wall Street Journal, 10/15/07)
Bloomberg's Amity Shlaes: Raising The Capital Gains Tax Rate Would Make The U.S. Economy "Less Competitive." "When the capital- gains rate is low, America feels like doing business. When the rate is high, the country turns its attention elsewhere. ... If a capital-gains rate increase alone, however, makes it into 2008 law, the U.S. economy will become less competitive compared with other economies at a crucial time. And if you don't mind me saying, that's a spread that can affect a lot of relationships." (Amity Shlaes, Op-Ed, "Wife-Swapping, Taxes And Spreads Are All Related," Bloomberg.Com, 8/1/07)
Martin Sosnoff, Chairman And Founder Of Atalanta/Sosnoff Capital, Said Higher Tax Rates On Capital Gains And Dividends Will "Dampen The Stock Market" And Reduce Investment Capital."Higher tax rates for capital gains and dividends are bound to dampen the stock market. The macro picture is that the more you drive down after-tax rates of return, the less capital you have available for reinvestment."(Martin T. Sosnoff, Op-Ed, "Blackstone And Taxes (Ours)," Forbes.Com, 6/29/07)
ECON 101: Capital Gains Tax Cuts Help America's Seniors And Middle Class Americans:
The Wall Street Journal: "But it's not only the wealthy who will take a hit from higher capital gains taxes. Recent surveys indicate that roughly 52% of American adults own stock in some form, and last year 8.5 million of these investors paid a capital gains tax." (Editorial, "A Capital Gains Primer," The Wall Street Journal, 10/15/07)
The Tax Foundation's Scott Hodge: "[T]he Reliance On Capital Gains And Dividend Income Tends To Rise With Age." (Scott A. Hodge, "Reliance On Capital Gains And Dividend Income Tends To Rise With Age," The Tax Foundation, 12/14/05)
The Joint Committee On Taxation Reported Figures Demonstrating That Middle-Income Americans Benefit From Lower Capital Gains And Dividends Tax Rates. "Figures from the Joint Committee on Taxation (JCT) help support the idea that more middle class Americans benefit from this tax break. In 2005, about 20 percent of the taxpayers who were expected to report capital gains income -- and 24 percent of those expected to report dividend income -- earned less than $50,000 annually, the JCT data showed." (Joseph J. Schatz, "Tax Break Tries On 'Middle Class' Label," Congressional Quarterly Weekly, 2/17/06)
36 Percent Of Taxpayers With Capital Gains Income Are Over Age 55. (Scott A. Hodge, "Reliance On Capital Gains And Dividend Income Tends To Rise With Age," The Tax Foundation, 12/14/05)
27.6 Percent Of Americans Over 75 Have Income From Capital Gains. (Joseph J. Schatz, "Tax Break Tries On 'Middle Class' Label," Congressional Quarterly Weekly, 2/17/06)
Taxpayers Age 55 With Capital Gains Derive About 22 Percent Of Their Adjusted Gross Income From Capital Gains Income. (Scott A. Hodge, "Reliance On Capital Gains And Dividend Income Tends To Rise With Age," The Tax Foundation, 12/14/05)
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Yesterday, Obama Reiterated His Support For Nearly Doubling The Capital Gains Tax Rate; Claiming It Wouldn't "Distort ... Economic Decision Making":
CNBC's Maria Bartiromo: "He [Obama] wants to raise taxes. ... Right now, as you know, the cap gains tax is at 15%. He has yet to give us a specific number, how high he wants that number to go. He has said, and he told me today, that he won't go above 28%. So we are talking about the possibility of a doubling in the capital gains tax." (CNBC's "Closing Bell," 3/27/08)
Obama Said Raising The Capital Gains Tax Wouldn't "Distort ... Economic Decision Making." Obama: "I think that we can have a capital gains rate that is higher than 15 percent. If it--and if it, you know--when I talk to people like Warren Buffet or others and I ask them, you know, what's--how much of a difference is it going to be if it's 20 or 25 percent, they say, look, if it's within that range then it's not going to distort, I think, economic decision making." (CNBC's "Closing Bell," 3/27/08)
ECON 101: Higher Capital Gains Taxes Would Harm The Economy:
FLASHBACK: In 1963, John F. Kennedy Said That "The Tax On Capital Gains Directly Affects Investment Decisions." John F. Kennedy In 1963: "The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital ... the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy." (Editorial, "A Capital Gains Primer," The Wall Street Journal, 10/15/07)
Bloomberg's Amity Shlaes: Raising The Capital Gains Tax Rate Would Make The U.S. Economy "Less Competitive." "When the capital- gains rate is low, America feels like doing business. When the rate is high, the country turns its attention elsewhere. ... If a capital-gains rate increase alone, however, makes it into 2008 law, the U.S. economy will become less competitive compared with other economies at a crucial time. And if you don't mind me saying, that's a spread that can affect a lot of relationships." (Amity Shlaes, Op-Ed, "Wife-Swapping, Taxes And Spreads Are All Related," Bloomberg.Com, 8/1/07)
Martin Sosnoff, Chairman And Founder Of Atalanta/Sosnoff Capital, Said Higher Tax Rates On Capital Gains And Dividends Will "Dampen The Stock Market" And Reduce Investment Capital."Higher tax rates for capital gains and dividends are bound to dampen the stock market. The macro picture is that the more you drive down after-tax rates of return, the less capital you have available for reinvestment."(Martin T. Sosnoff, Op-Ed, "Blackstone And Taxes (Ours)," Forbes.Com, 6/29/07)
ECON 101: Capital Gains Tax Cuts Help America's Seniors And Middle Class Americans:
The Wall Street Journal: "But it's not only the wealthy who will take a hit from higher capital gains taxes. Recent surveys indicate that roughly 52% of American adults own stock in some form, and last year 8.5 million of these investors paid a capital gains tax." (Editorial, "A Capital Gains Primer," The Wall Street Journal, 10/15/07)
The Tax Foundation's Scott Hodge: "[T]he Reliance On Capital Gains And Dividend Income Tends To Rise With Age." (Scott A. Hodge, "Reliance On Capital Gains And Dividend Income Tends To Rise With Age," The Tax Foundation, 12/14/05)
The Joint Committee On Taxation Reported Figures Demonstrating That Middle-Income Americans Benefit From Lower Capital Gains And Dividends Tax Rates. "Figures from the Joint Committee on Taxation (JCT) help support the idea that more middle class Americans benefit from this tax break. In 2005, about 20 percent of the taxpayers who were expected to report capital gains income -- and 24 percent of those expected to report dividend income -- earned less than $50,000 annually, the JCT data showed." (Joseph J. Schatz, "Tax Break Tries On 'Middle Class' Label," Congressional Quarterly Weekly, 2/17/06)
36 Percent Of Taxpayers With Capital Gains Income Are Over Age 55. (Scott A. Hodge, "Reliance On Capital Gains And Dividend Income Tends To Rise With Age," The Tax Foundation, 12/14/05)
27.6 Percent Of Americans Over 75 Have Income From Capital Gains. (Joseph J. Schatz, "Tax Break Tries On 'Middle Class' Label," Congressional Quarterly Weekly, 2/17/06)
Taxpayers Age 55 With Capital Gains Derive About 22 Percent Of Their Adjusted Gross Income From Capital Gains Income. (Scott A. Hodge, "Reliance On Capital Gains And Dividend Income Tends To Rise With Age," The Tax Foundation, 12/14/05)
Taxpayers Age 80 With Capital Gains Derive More Than 24 Percent Of Their Adjusted Gross Income From Capital Gains Income. (Scott A. Hodge, "Reliance On Capital Gains And Dividend Income Tends To Rise With Age," The Tax Foundation, 12/14/05)
NOTE: Obama Acknowledges That Millions Of People Own Stock And Benefit From Lower Capital Gains Rates. CNBC's Maria Bartiromo: "But it's not just the Warren Buffets of the world who own stocks, so..." Obama: "Of course not." Bartiromo: "...let's hypothetically say that ... cap gains tax goes from 15 percent to 25 percent." Obama: "Right." Bartiromo: "You're impacting a lot of people." Obama: "Right." Bartiromo: "A hundred million Americans own stocks today." Obama: "Absolutely." Bartiromo: "So it's not just the rich." Obama: "No, no, no, absolutely." (CNBC's "Closing Bell," 3/27/08)
ECON 101: Higher Capital Gains Taxes Have Historically Translated Into A Decline In Tax Revenues:
Yesterday, Obama Claimed Raising The Capital Gains Tax Rate Will Increase Tax Revenue And Help Fund His Spending Proposals. Obama: "[W]hat it will also do is first of all help out the federal treasury, which is running a credit card up with the bank of China and other countries. What it will also do, I think, is allow us to make investments in basic scientific research, in infrastructure, in broadband lines, in green energy and will allow us to give us--give some relief to middle class and working class families who have been driving this economy as consumers but have been doing it through credit cards and home equity loans." (CNBC's "ClosingBell," 3/27/08)
But The Wall Street Journal Notes That Higher Capital Gains Tax Rates Result In A Decline In Tax Revenues. "For the past 40 years, capital gains tax increases have been associated with a decline in tax revenues. Rate cuts have generated more tax collections." (Editorial, "A Capital Gains Primer," The Wall Street Journal, 10/15/07)
"One Reason Is That Higher Rates Give Investors An Incentive To Hold Their Assets To Avoid Paying The Tax." (Editorial, "A Capital Gains Primer," The Wall Street Journal, 10/15/07)
Alan Reynolds, Senior Fellow At The Cato Institute: "[I]nvestors Would Sit On Stocks Rather Than Sell And Pay The Tax." (Alan Reynolds, Op-Ed, "Tax Delusions," New York Post, 2/15/08)
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