Monday, September 26, 2011

FOD 2011.09.26

Charles Krauthammer is, for my money, the best political columnist of our time. He is articulate and insightful, without being overly snarky. It also helps that he and I share the same position on most issues.  :-)

In his most recent column he reminds us of obama's true nature: "a staunch believer in the redistributionist state, a tribune, above all, of “fairness” — understood as government-imposed and government-enforced equality."
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.”
Think about that for a minute. The downgrader-in-chief advocates using tax policy to advance a social program of 'fairness' (whatever that is) regardless of any negative consequences for revenue collection. That's a questionable position at any time, but a particularly disastrous one when the national debt and deficit have reached unparalleled heights and the economy is shaky at best. It also provides a disturbing insight into obama's ideological perspective.
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.

Now that he’s president, Obama has actually gone and done it. He’s just proposed a $1.5 trillion tsunami of tax hikes featuring a “Buffett rule” that, although as yet deliberately still fuzzy, clearly includes raising capital gains taxes.

He also insists again upon raising marginal rates on “millionaire” couples making $250,000 or more. But roughly half the income of small businesses (i.e., those filing individual returns) would be hit by this tax increase. Therefore, if we are to believe Obama’s own logic that his proposed business tax credits would increase hiring, then surely this tax hike will reduce small-business hiring.

But what are jobs when fairness is at stake? Fairness trumps growth. Fairness trumps revenue. Fairness trumps economic logic.
Focusing solely on the capital gains tax issue, the "economic logic" in question is the fact that taxing capital gains is actually taxing capital investment. Raising the tax rate will reduce the incentive for investors to commit capital to businesses, stifling economic growth in the midst of the current near-recession. Furthermore, capital gains are already taxed at what the Wall Street Journal calls "prohibitative rates," due to the fact that capital gains are taxed twice.
The problem is that this is a tax increase on capital investment, which the U.S. already taxes at prohibitive rates thanks to our high corporate tax rate of 35%. Capital gains and dividends are taxed twice, first as corporate profits and then as payouts to individuals. Their real capital gains tax rate is closer to 45% than 15%, which is why politicians of both parties have long supported a capital-gains rate differential.
Both the WSJ and Charles Krauthammer agree that obama's so-called Buffet rule is bad economic policy. The WSJ ascribes it to politics.
We rehearse all of this because it shows that the real point of Mr. Obama's Buffett Rule and his latest deficit proposal isn't tax justice or good tax policy. It is all about re-election politics.
Krauthammer thinks its obama being true to himself.
That’s why “soak the rich” is not just a campaign slogan to rally the base. It’s a mission.
I think they're both right...

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