Capital Pains
By INVESTOR'S BUSINESS DAILY
Thursday, April 17, 2008 4:20 PM PT
Fiscal Policy: In blowing a slam-dunk question on capital gains taxes
in Wednesday night's debate, Barack Obama revealed not only a flimsy
grasp of economics, but a bitter envy that drives his politics.
Gibson asked Obama: "You have said . . . you would favor an increase
in the capital gains tax. . . . Why raise it at all, especially given
the fact that 100 million people in this country own stock and would
be affected?"
Obama's answer: "Well, Charlie, what I've said is that I would look at
raising the capital gains tax for purposes of fairness. We saw an
article today which showed that the top 50 hedge fund managers made
$29 billion last year =97 $29 billion for 50 individuals. And part of
what has happened is that those who are able to work the stock market
and amass huge fortunes on capital gains are paying a lower tax rate
than their secretaries. That's not fair. "
This wasn't a first. Obama has said more than once he would lift the
capital gains tax rate from the current 15% to a punitive 28%.
Still, Gibson's question was a good one, betraying a depth of
knowledge about economics uncommon for a journalist. That Obama
flubbed it speaks volumes for his poor grasp of economics.
In answering a question moments earlier from ABC News re****ter and
former Clinton White House aide George Stephanopoulos, Obama had vowed
not to raise taxes on anyone earning less than $200,000 a year. Later,
he completely contradicted himself.
Apparently, Obama doesn't know that 52% of all adults now own stock =97
so raising the capital gains rate from 15% to 28% would hit millions
of people with incomes below $200,000.
That includes, by the way, the secretary of those hedge fund managers,
who likely owns stock herself. She'll really feel the brunt.
Indeed, data from Congress' Joint Committee on Taxation show 20% of
those with capital gains in 2005 had annual incomes less than $50,000.
So Obama's "tax-the-rich" plan to jack up cap gains rates would in
fact become a huge middle-class tax hike.
Add to this his idea to lift the Social Security tax cap on incomes
above $97,000, which would hit many of the same people, and you get
the idea that Obama doesn't understand economics at all.
Maybe it's that he and his wife, Michelle, just re****ted $4.2 million
in income for the last year =97 with little or none of it in the form of
capital gains.
Whatever the case, he obviously doesn't get it. He'd rather lash out
at people he thinks are rich, even if it means bringing in less
revenue to the federal government, a point that Gibson clearly made.
Obama spent part of his early career as a lecturer at the University
of Chicago law school. Maybe he should have taken an economics course
with one of that school's many Nobel-winning economists.
If he had, he'd understand that low taxes on capital create more
investment, more jobs and higher incomes. People have more incentive
to save and invest because the returns are greater.
Each of the three major capital gains tax cuts since President
Kennedy's was followed by booming stock prices and a surging economy.
This is no accident; it's cause and effect.
What if Obama gets his way? A just-released Heritage Foundation study
finds raising the cap gains tax rate to 20% and restoring the 37% rate
on dividends would over two years kill 683,000 jobs, reduce GDP by $90
billion and slash $1,675 from the average family of four's income.
Obamanomics would be a disaster.
During this campaign, Obama has styled himself as an apostle of "hope"
who'll lift up the poor, the destitute and the downtrodden.
But his reckless tax hikes, based on envy, not sound economics, would
deprive those very same poor and minority communities of the capital
needed to provide jobs, incomes and better futures for the people who
live in them. Call it the audacity of hopelessness.
=A9 Copyright 2008 Investor's Business Daily.
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