Cycloptichorn wrote:georgeob1 wrote:Cycloptichorn wrote:Phoenix32890 wrote:Off the top of my head: Rolling back the capital gains tax will discourage small investors from investing in our economy.
If the less well to do people are given tax relief, how with THAT assist in lowering the deficit?
Small business investors invested HEAVILY in our society during the 90's, when the tax levels were at the period in which we are discussing returning them to. So I don't actually believe there is any evidence that what you posit is in fact true.
Cycloptichorn
I have read the response twice - and I still can't figure out what it means, or determine if it has anything at all to do with the statement to which it refers.
We do need to curtail spending ijn many areas, including that on the military. We also need to maintain taxation at levels that stop short of penalizing beneficial economic activity. I don't for a moment believe that the Democrats will give us any net reduction in spending. Instead they will simply move it from areas in which they have little interest to others that are demanded by the single issue groups that are the most portent forces in the party.
I thought it was straight-forward; at times in which the cap. gains taxes were higher, we didn't see the drops in investment in America predicted by Phoenix.
I agree with you about curtailing spending; it's also an area which in some ways I, gasp,
disagree with Obama on!!! Every time he says the words 'middle-class tax cut,' I cringe. NOBODY'S taxes need to be cut right now.
Cycloptichorn
You are focusing on the wrong area as usual. Lower capital gains taxes INCREASES tax revenues as realized capital gains occur when rates are low as opposed to when Cap Gains rates are high. People are more likely to trade when cap gains rates are low.
http://www.heritage.org/Research/Taxes/wm47.cfm
Myth 4: Capital gains tax cuts benefit the "wealthy."
Fact 4: Capital gains tax cuts improve the entire economy.
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Capital gains tax reductions stimulate economic growth, which benefits the entire country. As President Kennedy noted, "A rising tide lifts all boats."
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Capital gains taxes disproportionately hurt the elderly, low and middle-income investors who have less discretion over the timing of their capital gains.
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Most people who report capital gains do not have high annual incomes.
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People with high incomes are most sensitive to capital gains tax rates, because they possess the most flexibility and means to avoid high tax rates. When capital gains tax rates are high, people with high incomes do not sell their assets and realize their gains.
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High-income people pay a greater percentage of capital gains taxes when capital gains tax rates are low than when capital gains tax rates are high.
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High capital gains tax rates make capital scarce. When capital is scarce it goes to safe investments. Low capital gains tax rates make capital abundant. When capital is plentiful it goes to "riskier" investments - such as inner cities and disadvantaged areas.
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