Re: POTUS 45.21 STAND for our great National Anthem
I don't claim to be a tax expert or economist, but a couple of comments.
First, money "tied up in capital gains" isn't exactly doing nothing, as you claim. If it does nothing, it's not going to produce a capital gain. It's money that is invested in bonds or stocks or real estate or whatever that is (hopefully?) increasing in value so that when I sell it I will sell it at a "gain" which will then be taxed.
Smarter people than me will tell me where I'm wrong, but I think there are a number of justifications for a lower capital gains rate. First, a higher capital gains tax discourages savings in the form of investments. Second, a higher capital gains rate negatively affects corporations, who are then encouraged to use debt for financing, as opposed to equity, which can put them into a dicey situation as the economy changes.
Finally, I don't know of any evidence to suggest that changing the capital gains rate actually has an effect on income inequality in the country. Income inequality needs to be addressed, but that's simply done by raising the income tax rate on higher income earners. Doing it with the capital gains rate simply doesn't work. The wealthy just change the way they do business.
Yes, it does nothing. If I have $1M in some investment, it's just there. It's not spent on someone's wage, it's not paid to anyone to make something, it just sits there. And if it loses value, I even get to take a tax deduction. The gain is because someone else values the thing more than I do and is willing to pay more for it. That does not actually mean it's better, just that it's more valuable to someone else.
The second point it total BS. The group that really gains from capitol gains taxes don't need any more incentive to save more money. They already are for two reason 1) more power, and 2) it does not cost nearly what they earn relative to less income groups. So it's super easy to save money when you are earning in excess of $1M a year- again, the largest group, BY FAR, that earn capitol gains. And the "kind of investment" idea is crap, too- well over 90% of stock sales are trades, not direct investments in a company. When you trade stocks, companies don't see a penny of that exchange, when someone pays you more money for the stock than you paid for it, companies don't see a penny of that. If you want to encourage investments directly into companies- I'm fine with that. But handing that same incentive to people who trade stuff is total BS.
We really don't need to raise the tax rates of the top earners. Again, go look at IRS.GOV to see the data. This is UNEARNED income. Why in the world does UNEARNED income get a tax advantage? You didn't actually work for it, you didn't earn it, you should not pay a lower tax rate on that income than any other income.
And don't give me the BS argument that the wealthy will just find another way- as if that's a reason to not do some action. Some might, sure. But the gross majority will not. Nor will they take their money so some random tiny island that has no capitol gains taxes- because all of the real investment opportunities are in countries that you have to pay taxes.
If you don't think that it has an impact on income inequality, do the math. It's really easy. And go look at the data on IRS.GOV. And see all of the income that they hyper rich lock up off of the real economy, just earning income with light tax rates. This whole policy is insane. We don't need MORE mechanisms for the rich to get richer. They have plenty of them already. We need them to spend their money so that the rest of the economy can actually work. And if they don't want to- tax them, and pay people to do stuff.
Saving money is good if you eventually plan on spending it. Otherwise, it's just money taken out of the economy, which takes money away from hard working people. If you don't understand that, then you don't understand our consumer based economy.
