Money is money

And capital gains are plain old personal income:

For the very richest Americans, low tax rates on capital gains are better than any Christmas gift. As a result of a pair of rate cuts, first under President Bill Clinton and then under Bush, most of the richest Americans pay lower overall tax rates than middle-class Americans do. And this is one reason the gap between the wealthy and the rest of the country is widening dramatically.

The rates on capital gains — which include profits from the sale of stocks, bonds and real estate — should be a key point in negotiations over how to shrink the budget deficit, some lawmakers say.

“This is something that should be on the table,” said Rep. Chris Van Hollen (D-Md.), one of 12 members on the congressional “supercommittee” tasked with reducing the deficit. “There’s no strong economic rationale for the huge gap that exists now between the rate for wages and the rate for capital gains.”

Advocates for a low capital gains rate say it spurs more investment in the U.S. economy, benefiting all Americans. But some tax experts say the evidence for that theory is murky at best. What is clear is that the capital gains tax rate disproportionately benefits the ultra-wealthy.

2 thoughts on “Money is money

  1. Cpaital gains in the form of stock dividends come out of profits, and profits are increased by cutting “costs” (like wages, repairs and maintenance, development). Low taxes on dividends encourage executives to plunder their companies to extract cash for profits at the expense of any rational decisions for maintaining the health of the company. Higher dividends help boost the stock price which earns the bonuses for top executives – more money extracted from the company. Once the company is bled dry, they can close it or sell it off and take the money to live the high life.

    This is quite the opposite of the supply side dream of tax savings plowed back into investment. There was once a time when even bankers and brokers made much more modest incomes and people refused raises and took their money in pension and insurance benefits because the higher income would have put them into a higher tax bracket.

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