The Assault on Investment

Taxes may well be the price of a civilized society, but they can also choke growth in said society. All things being equal, lower tax rates mean Americans can choose how to spend or save more of their own money. One of the key fights over taxation going forward is how to address “investment income” known as capital gains. Unfortunately, small percentage increases in the rate can mean big damage to jobs and the economy.

Yesterday, leading economist Allen Sinai wrote about his new study on the effects of adjusting the tax rate from its current level of 15 percent in the Wall Street Journal,

… at a 28% capital gains tax rate, economic growth declines 0.1 percentage points per annum and the economy loses about 600,000 jobs yearly. If the capital gains tax rate were increased to 50%, real GDP growth would decline by 0.3 percentage points per year, and there would be 1.6 million fewer jobs created per year. At a 20% capital gains rate compared with the current 15%, real economic growth falls by a little less than 0.1 percentage points per year and jobs decline about 231,000 a year. Smaller increases in the capital gains tax rate have smaller effects on the economy, but the effects are still negative.

It’s all about the economy and jobs for voters, so it seems strange that our elected officials would push a plan to dampen the outlook for both. Meanwhile, we came across a great video (courtesy of explaining the issue of double taxation:

This entry was posted in Intrusive Government, Jobs in America, The Economy and tagged

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