Tuesday, January 24, 2012

The Democrats didn't complain about this

There's been a lot of fuss about Mitt Romney's effective tax rate. When John Kerry ran for the presidency, his effective tax rate was lower. I don't recall democrats complaining at all about that.

Photobucket

Source here.

I actually don't begrudge John Kerry his tax rate any more than I begrudge Mitt Romney his. Let me explain why. The media has failed to mention that these rates are so low because they're mostly capital gains taxes. What are capital gains? When you take income you've earned and paid taxes on and buy investments and those investments make a profit, those profits are capital gains.

The gains you've made are new income, it's true. The democrats argue that out of fairness, we should tax them at a higher rate. This is something I've addressed in a previous post, which you can read here. The short version is that if you tax capital gains at a higher rate, people don't find investing as attractive, so they do it less. That means you end up with less capital gains profits to tax. So, not only does the economy suffer because investment is critical to growth, but the government is able to steal make less money via taxation, too. Thus, everybody loses if capital gains tax rates are raised too high.

In other words, Democrats complaining against the most effective (low) capital gains tax rates aren't simply anti free market, they're anti logic, anti prosperity, anti economic growth and anti tax revenue.

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