Charles Krauthammer‘s column today in the Washington Post (“Return of the Real Obama,” 9/23/11) reveals the Barack Obama, who’s apparently been hidden away for the past few years:
In a 2008 debate, Charlie Gibson asked Barack Obama about his support for raising capital-gains taxes, given the historical record of government losing net revenue as a result. Obama persevered: “Well, Charlie, what I’ve said is that I would look at raising the capital-gains tax for purposes of fairness.”
A most revealing window into our president’s political core: To impose a tax that actually impoverishes our communal bank account (the U.S. Treasury) is ridiculous. It is nothing but punitive. It benefits no one–not the rich, not the poor, not the government. For Obama, however, it brings fairness, which is priceless.
That was, indeed, a memorable moment–but not in the way that Krauthammer thinks. The real problem was that the question Charles Gibson asked was premised on a falsehood. As FAIR pointed out at the time, Gibson was
pressing Obama about his plan to raise capital gains tax rates to levels of the early 1990s–a position that struck Gibson as bizarre, since lowering these taxes increases government revenue:
In each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
This question rests on two false assumptions. The capital gains tax is paid by a small percentage of the population. As Citizens for Tax Justice pointed out (3/16/06), “The wealthiest 10 percent of taxpayers enjoyed 90 percent of the capital gains eligible for this special tax break.” Gibson’s reference to the 100 million Americans who own stock is irrelevant, since this tax is applied to the sales of stocks and real estate–not the act of having a retirement account.
Gibson’s other point–“History shows that when you drop the capital gains tax, the revenues go up”–might be popular in certain conservative circles, but the evidence to support it is thin. As the Center on Budget and Policy Priorities pointed out (7/12/07), there is little causal relationship between the capital gains tax cuts and increased federal tax revenue. Economist Jason Furman of the Brookings Institution pointed out the the “Joint Committee on Taxation and Treasury both score raising capital gains taxes as raising revenues” (New Republic, 4/16/08).
it’s kraut, it’s friday, it’s lying…..
in other news: sun comes up in east….
Well Krauthammer is saying I think that Obama is reverting back to form.A man of the people,wagging a finger at the uncaring ruling class.What Obama really believes is up for discussion.That he is returning to his base is not.
Lets look at capital gains for a moment.Capital gains tax.A tax on profit.A tax on risk that becomes profit.The most interesting thing is to follow the money trail here.Behind every cent that is spent…..Behind every dollar made(capital gains),are already any number of taxes built in.The capital gains tax is simply a way to take MORE from what has already been taxed before.Often taxed to death.
The death tax…….You work ,you risk, and your reward is whatever you can glean from all the taxes you have paid along the way.There has never been anything you bought or sold ,that has not been taxed any number of ways.But like a vulture the government waits to penalize those who won the fixed game .Those who won by playing under the governments rules every step of the way.That is not supposed to happen.Is this unfair?Only if you believe in the constitution and personal rights over the communal.If you believe all success is simply rental from the government- than it is immensely fair.
@michael e: Profit and capital gains are two separate things. Because you have a gain on a capital asset does not necessarily mean that the asset is profitable, or that that asset has paid its taxes, or really anything else about it: it only means that it is worth more now than when you bought it. It is inaccurate– and probably disingenuous as well– to conflate the two. For a long time, the rationale (such as it was) behind the lower capital gains tax rate is that the “gain” is partly illusory due to the effect inflation has on an asset, i.e., a $100 asset bought in 1950 might now go for $300 on the open market simply because of inflation. The unfortunate by-product of this rationale is that money realized from investment is treated as more worthy– in that it is subject to less tax– than money that is earned through actual labor. Why should that be so? I’ll grant investment is important for the overall functioning of society, but so is labor. Do we really wanna tax policy that says investment income is so dang important we’re wiling to tax it at a rate that is artificially low and bears no relation to inflation anymore? I don’t know the answer to these questions, and neither do you.
What money trail? What in God’s holy name are you blathering about? If you think this is part of some diabolical conspiracy, either present some evidence or shut up about it. There are a number of valid criticisms to make. The allegation of a money trail is not one of them. Just because someone thinks that a tax should be raised does not make them evil. You need to get over that.
An alternative, and far more realistic, way to look at the inheritence tax is to realize that this country is not intended to be a breeding ground for royalty that gets to accumulate wealth within a family tax-free. I believe that noted leftist Winston Churchill advocated for an inheirtence tax in order to prevent the development of a race of the idle rich. As a free-marketeer, I would think you’d be in favor of an inheritence tax: if I’m successful and “beat the game” and make money through the free market, then it’s something I’ve done for personal reasons which has a benefit to society; however, my heirs have not necessarily done any such thing, and there should be no free-market justification for giving them a tax-free handout. I submit that there are several justifications for the inheritence tax that do not rely on the theory that succes is a rental from the government.
“Like a vulture, the government waits to penalize… .” Yep. That’s what vultures do: they penalize.
@chinesische: The last sentence means that michael e ain’t nearly as smart as he thinks he is.
Well john When i reap a capital gain, it is profit.A capital gain -is not a capital loss.Inflation or not.Simple No?A capital gain comes from risk.If we risk- we hope to win that gamble.Taxing the end result will help to curb the amount of risk one is ready to take.Risk is investment.And your question “is investment more important than labor” ,is not so much a philosophical question ,as much as pure math.Obviously the government feels they make out better under this system.
When i said follow the money trail i meant it literally.Every cent that makes its way into the process that becomes a capital gain,has already been taxed.i can’t think of many ways it has not been.Does that make sense to you?And I don’t think people wanting to raise taxes is evil.Just wrong at this time.By the way Clinton feels the same way so maybe he is “not as smart as he thinks he is” and is also blathering.
Now for the inheritance tax.The Churchill quote was interesting from a historical perspective.But knowing him as a royalist that agreed with the royal family not being taxed at all and retaining all their lands and wealth I can’t square the two .When our founding fathers first wrote the constitution they wanted to include the phrase “the free and complete ownership of personal lands free of government controls”instead of “pursuit of happiness.”It was changed only in the last minute.They felt strongly that government could not claim lands upon your death.But lets move forward.I come from Italy lets say with nothing.I work hard all my life though I have no education or ways of means.I am worth millions.My children will have a better life.every thing i have earned I shall bequeath to my loved ones.Not so fast there partner.You may of paid taxes on every cent you made.But now that you are dead you may(or may not)realize you had the misfortune of being designated rich.And now the government wants more.They want to stop the transfer of honestly earned wealth to the family of the man who earned it.The last thing they want is to have idle rich.As if that is their job to lord over how people live.They strangely seem to have no problem with idle poor.So They want it transferred to someone who really deserves it.The government.We will agree to disagree on this one John.John have you ever just realized that the government looks for any rationalization to tax.I think a little man sits in a shack thinking up new taxes.Trying to justify every new tax must be tiring.
In a 2008 debate, Charlie Gibson asked Barack Obama about his support for raising capital-gains taxes, given the historical record of government losing net revenue as a result. Obama persevered: “Well, Charlie, what I’ve said is that I would look at raising the capital-gains tax for purposes of fairness.”
Why would anybody think this was a memorable question?
Only rich people pay capital gains. So why on earth would Obama want to raise capital gains taxes?
Again, capital gain does not necessarily denote a profitable asset. Nor does it indicate the capital asset has paid any taxes. You’re assuming both of these things. Suppose I own stock in a company that has used clever accounting to pay almost zero taxes– there are a lot of them out there that do this, and I have no problem with that. Under your reasoning, I shouldn’t be entitled to any kind of favorable tax treatment because my asset, of which I’m just a shareholder who has very little say in how the business is run, hasn’t paid taxes to make its profit. If indeed it made any profit: there are a lot of valuable businesses that don’t show a profit. See the problems here?
If you’re so hung up on viewing it as a profit for you, personally, then why is it a problem to tax that profit you made at anything other than your ordinary income tax rate? Because you already got taxed on the money you invested, you say? Sorry, that’s hardly a compelling reason: if you wanna avoid having income– which your definition of profit certainly qualifies as– put your money in your mattress or something. Now I hardly think it’s wise for tax policy to encourage that sort of savings. But nor is it wise to have an unrealisticly low capital gains tax rate when we have wars to fight and an economy to try and drag outta a recession.
This bit about the founding fathers not wanting an inheritence tax is quite a stretch. They wrote what they wrote. If it was agreeable to them, even if it was a last-minute change as you allege (with no proof, as usual), who are you to say that we should now go back and change it? That’s hardly in keeping with Tea Party values: I guess the written word of the founding fathers is only revered to the extent it suits you. And you rail about all kinds of fabricated hypocrisy? Remove the log from your own eye before worrying about the splinter in others.
And taking your example of the Italian immigrant: yep, he did well. He was a successful capitalist and made his money. But his heirs and assigns did not. Why should they be given a tax-free leg up by accident of birth or friendship? It makes no sense under a free-market rationale. You seem to be against giving the poor any kind of assistance. Why does the rationale against helping the poor not apply to helping the children of the wealthy? And BTW, it’s inaccurate to think or portray the estate tax as taking everything. First it only applies to very large estates– ones so large that losing a portion to taxes could be expected to be insignificant or nearly so. Second, there is a whole industry devoted to helping people avoid or minimize estate taxes; if you’re that danged concerned about it, go hire one of them to sort it out for you.
These aren’t new taxes. It’s adjusting the rates of current taxes. And even if it was a new tax, that’s how this game is played. The govt. sets a tax strategy. Lawyers and accountants figure out a way to defeat it. The strategy is altered if need be, and a new round might begin. That’s the way it works, pal. It’s pretty much been that way since the dawn of government.
John
First it is not the governments job to decide the ease with which my children are able to live.Or to create their ideal through taxation.Or double or quadruple taxation.All for the ‘sake of the poor”Anymore than to tax gay marriage so as to keep things within the framework of their”ideal”.Of course we could send all money to the poor if it makes it any better.You see theft is still theft weather or not the thief plays Robin hood or uses it for himself.This is social planning of the highest degree,and simply not envisioned in anything I have ever read for this country.Certainly the constitution is clear on this,if not the declaration.
Your example on the capital g tax is a little confusing.I would say that the key thing you wrote is when you said is it unrealisticly low.Well please read :Taxes on investment income remain too high and lead to multiple distortions by Martin Feldstien.See what you think of that
@michael e: The rationale for the inheritence tax comes from free-market economics, which you usually espouse. No it’s not the govt.’s job to decide the ease with which your children live. But according to your rabid free-marketism, it should be the market’s job (combined with their ability) to determine how easily they live. That’s usually your answer for everything: we wouldn’t be in this mess if the govt. would just stay outta [whatever]. But in this case, the govt. is attempting– in some minimal way– to create a free market where it otherwise wouldn’t exist. But here you cry foul, even though it’s blatantly contradictory to your free-market principles. I’m struck that you abandon them so freely and turn to a libertarian privacy fundamentalist view when it suits your purpose. Why draw the line here? It makes no sense. I know… let’s follow the money trail… You’re drawing the line here because you wanna leave more money to your heirs and assigns tax-free, and you don’t wanna hire an estate-tax professional in order to do it. Using your logic and example, I’ve cast insurmountable aspersions on your motives and credibility.
There are many economists that decry the very nature of the capital gains tax. I disagree with them. There are also economists who support it. Regardless, capital gains taxes have become a fact of life. Tweaking the rates from time to time, should not be off limits.
My example was a little confusing? Um, OK… Sorry, I guess. You sure you made it through medical school? You’re not a doctor like Dr. Pepper is a doctor, are you? But seriously, re-read it a few times and if it doesn’t make sense, then… well… there’s pretty much nothing I can do to explain it better and you’re on your own.
John I guess I am one of those people who greatly agree with the economists you don’t agree with.The real truth is if money is made at all the government wants a cut.They don’t care if it has already been taxed or not.Just like the mob they simply want a part of what you have …period.And just like the mob the right or wrong of it all matters not one wit.I think your problem is you are fighting to make it sound honorable.Just remember the saying of the IRS.WE GOT WHAT IT TAKES TO TAKE WHAT YOU GOT!Seriously just say gimme your fucking money and be done with it.I’d have more respect for your lot.
As far as the death tax and free market capitalism let me explain it to you.I make money.I pay taxes.What is left I do what the hell i want with.None of your God damn business if I give it to a poor man so he does not have to work ever again at the saw mill.Or my son so he does not have to(work).If I leave him with 2 million the free market hopes he spends it.But they have no say.He can do as he wants with it.My money is now his money upon my death.That is my choice.I can leave my money to Bill gates so he can buy a golden toilet.None of your business.If I leave a carving to my daughter- that my father carved ,and left to me .Does anyone have a right to what is mine?What was made ,and earned by my family?Of course not.And i don’t give a God damn if that carving would look better in some poor unfortunate mans home.Do you not understand ownership at all?You have no moral ground on this at all.Except as Friggin Robin Hood.And i do mean hood!
As far as understanding your capital gains examples- of course I understand the limits of what you are saying.The problem is you don’t ,and probably can’t, so i am trying not to bang my head into the wall.You see i am one of those people who has never understood why card counters are ejected.Or maybe I should say I do understand it all too well.They play the game too well.Winning is cheating.The house does not want you to win even if you play by the rules.Bottom line is you win and they chuck you out……or tax you.Now let me go turn on the Godfather.I need my POLITICAL FIX.
@michael e: I understand your reasoning behind opposing the estate tax. What I don’t understnad is how you reconcile it with your rabid free-marketeerism. I understand there’s a fundamental privacy right/don’t-tell-me-what-to-do-with-my-money rationale. Why does it trump free-market economics here? There’s little reason why it should.
John i think it is perfectly in keeping with free market principles.Im not sure you are showing me were i diverge from that.Or where the conditions that our constitution create ,between free markets ,and personal freedom- become hypocritical.I think they are simpatico.Free markets dictate only WHAT is sold.Not who it is sold to.The working rich…or the idles rich for instance.
@michael e: Giving a tax-free windfall to someone because of a rich person they’re related to or friends with cuts against free-market principles. In the free market, you’re ‘sposed to go out and work had and earn your way. If everybody would do this, society would be better off overall. Therefore, welfare, while it may keep people from starving, is an overall detriment to society. That’s the thinking underlying free-market capitalism– which I agree with to a degree. If there should be no welfare under this thinking, then there shouldn’t be a tax-free windfall for the heirs and assigns of the welathy, either. That’s how it’s blatantly contradictory.
Simpatico means nice in Spanish.
Um I see where you are going but I am not against welfare.Though it is not in keeping with strict FM principles.Free markets would say that those who do not work in the free market experience ,should not benefit but……I see welfare as charity(with benefits)Part of the accepted upon safety net.The founding fathers believed in charity.We give 10% to our churches, and our government takes what we give them and has a percentage for charity.To a degree we have agreed on that.Government does most things badly with our money.And they have been no better on this.But that is another matter for another time.We live in a country that has many elements and balances.Yes some are socialistic.The rise of the Tea party was not in fighting for a zero sum game, but in fighting the tipping of the boat in the direction we should not be going.We are trying to reboot this country.Back to sanity.The engine of this economy is free market capitalism, with little government interference.That will allow(as the economy roars back) for things like charity, or support for other people in other lands.Obama is the tipping of that boat incarnate.We believe that he designs to gain the power derived from being the hand that holds the bread.Problem is is that that has never worked,and will not work here.We wont have room for excess, let alone basic need if this goes on.
As far as tax free windfall- it is nothing of the sort.It is an end to the taxation on earnings that have already weathered the tax storms of a lifetime.My fathers home was paid off.If he left it to me, they don’t re-start his mortgage upon me(to be given toward the poor of course) so i can feel his pain.I benefit wholly from a house that was paid off.Is that wrong?
Oh yeah -“playing nice” is slang and wrong.Um……acuerdo?I speak a bit of French,and enough to get my face slapped in several languages.Spanish not so much.
Obama is the tipping of that boat incarnate.We believe that he designs to gain the power derived from being the hand that holds the bread.
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So the Tea Party is paranoid. Got it.
If government does most things badly with our money, it’s a non sequitir to conclude that we should give it less or no money. Perhaps the solution is to make government perform better. Perhaps we’re expecting too much of government for the taxes we’re willing to pay. Etc. But to say it does a bad job, therefore the only thing to do is give it less or no money is not particularly logical.
As for inheritence that’s weathered taxes of a lifetime: that doesn’t make much sense. The death of the taxpayer and subsequent inheritence is completely different event, independent of what happened to that money prior. You don’t just get to say “It was already taxed; leave it alone now.” Outside of certain retirement plans, when there’s a taxable event it leads to taxation. You can’t just say “Well, I paid for this investment with taxable income; so now when I sell it and make income, you have to leave it alone.” As attractive as that might be to you, it don’t fly. Selling and making the income is another event. Just as the death and subsequent inheritence is another event. By and large, taxation is tied to events– not to the money itself. I can’t go to the store and refuse to pay sales tax when I buy something on the basis that the money in my pocket is relfective of payroll, FICA, and other taxes. Why does inheritence get to be different?
And no, it’s not wrong to benefit from that house with the mortgage paid off. But why– assuming that the decedent had a large enough estate to trigger the estate tax and did not plan accordingly– should you also get that particular benefit tax-free?
Well John your argument that just because government is so horrible at handling our money, is no reason that we should not give them more, and more, and more ,until they get it right -is exactly what we are going to change.I really think you are on the wrong side of that fence.
If your argument is correct about inheritance tax (it is not)one question please.Why does the government tax 50%?Or 40%?Or 5%?Why not 100%?If the goal is to make people work just as hard as dear old dad(instead of simply taxing all private reserves) -then reboot them to zero.If the goal is taxing anything given as a gift upon ones death ,why have any moral qualms at all?Just take it.Take it all.After all THEY didn’t earn it.Why leave any to those who did not earn it.And if i leave my son 2 million in cash or twenty million…he will be taxed.WHEN HE SPENDS IT!!But the government wants to take it BEFORE he spends it.You see they want it.Period!And along those lines what have they done to earn any of it.?If I win 100 million in a lottery I loose half in taxation lets say up front.Then another half upon my death?And another half upon my sons death?Almost makes it worth hiring a hit man for the government huh? All joking aside lets get our act straight.The government does not need to have you make some cockamaime excuses for their confiscation ,and redistribution of wealth.They just need a gun named the IRS.Be done with it.Take it all.Eat the rich.It is not like their is anyone brave enough to take on the massive attacks of a taxation a day government gone mad.A group with enough moral fiber to slay this breakaway elephant. To Stop it in its tracks.Although ……….. maybe the tea party has an elephant gun this time.Maybe they will still be standing when the last sling and arrows of the left have been fired in personal attacks.We shall see
As far as the house I should get it tax free.Why should I not.My father paid all the taxes and all the rest.If i sell it THEN i will be taxed.But again the government does not need excuses.Lets say they decide to tax white people at a higher rate because black have suffered the most in the transfer of wealth upward.Good argument for a liberal day.More liberal social planning that removes the freedoms of the individual for the collective.John im sure you are a good person.i just disagree with your politics.I would recommend reading the constitution.Study it.See where the ideas that we accept as commonplace today do not fit into that amazing work.16 amendment is fun reading on a stormy night.Remember when your taxes skyrocket for some reason that really makes no sense…..that sense is not the operative word.Feed the man.Thats all it is
@michael e: While you further illustrated that the Tea Party is paranoid, it’s my considered opinion that you didn’t address a single argument I put forth. Instead, you put forth some distractions about the IRS and racist tax schemes.
Care to try again?
About reading the Constitution: It reminds me of a great line from A Fish Called Wanda when Kevin Kline retorts to Jamie Lee Curtis that he’s not an ape because apes don’t read philosophy: “Yes they do, Otto. They just don’t understand it.”
Love that movie, and I love that line.I kind of see obama as Otto though.
I don’t see the tea party members as paranoid in any way.We see pretty clearly what Obama wants(you only have to read his words).What he has done,and how it has effected all of us.have we not been clear that we think him a failed president and want him out?
As far as answering your points I really thought I did.I think I get your belief system.You seem confused on mine.You -believe in some sort of sudo free market economy, but can’t quite grasp what is meant be personal freedoms.Personal ownership.Personal accountability,and personal rights.Your brain is rigid in a way that you cant see that all we have,and all we are, is NOT owned and operated by the government.Just the opposite in fact.You can’t seem to see the logic in “what is mine is mine”.Certainly Obama and Biden have lived by this motto.They have never given to charity at all.Yet they bleat that that is their goal in government.Where is the disconnect here from their personal lives and public.This is what i mean by personal responsibility.Look at what Sarah Palin has always given.There is your truth..Is it paranoid to realize it s not in their hearts,and never has been.It is a means to power.You try to rationalize a redistribution of wealth like it makes sense.You use old Dem canards that have gone on so long that they have become the status quo.We……are thinking outside that box.I don’t mean to insult you by saying read the constitution.Study it.If you do you will absolutely see where this government is off track.Otto or even a monkey could not miss it.Obama misses it because it is in his way.
I get emails about how brilliant Krauthammer is. Not sure what measurement these are using.
Frankly, I’m not impressed with his rhetoric and his lack of factual information. Apparently he is some kind of God to michael e. and the email senders. (Do wish michael would find the space bar. Isn’t that what thumbs are for?)
Swing and a miss, michael e. No addressing of any argument I put forth. More distraction about how Biden, Clinton, and other liberals are actually Scrooge MacDuck and go swimming in their money vaults.
Look, I get that there’s a don’t-tell-me-what-to-do-with-my-money argument against the inheritence tax. However, how does that argument morph to “don’t-tell-what-to-do-with-my-money-AND-let-me-do-it-tax-free”? They’re not the same thing.
The estate may have weathered the taxes of a lifetime, but that is not, nor should it be, the end of the inquiry. As I described above, the death and inheritence is a separate event. Taxes, by and large, are keyed to events, not to the money itself.
Furthermore, in your last post you espouse the free-market economy, but you’re still ignoring the pretty persuasive argument for the inheritence tax that is based on free-market principles. (And I think it’s fair to point out that you originally alleged that the only argument for the inheritence tax is based on the theory that success is rented from the govt.) How do you not see the blatant contradiction? If the whole concept of free-market capitalism is that society benefits by everybody having the personal freedom to acquire property and subsequently working hard to acquire it, why should some be permitted to short-circuit that mechanism by inheriting tax-free?
John you are absolutely correct and that “event” that you are looking for is called a transfer of wealth. Most of our taxes are on the transfer of wealth – income, sales, estate taxes etc. The GOP has very effectively re-named the estate tax the death tax, but you accurately conclude that it has nothing to do with a death. If a substantial amount is transfered to an heir during a person’s life, there’s gift tax, after death, estate tax.
Now to get back to the original article. The reason that tax collections sometimes increase after capital gains taxes are reduced are when this happens, tax accountants (like myself) contact their wealthy clients that have been sitting on appreciated stocks, personal holding company’s, etc. and tell them now is the time to sell as rates are unlikely to go further down in the forseeable future – and presto! – tax collestions.