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Obama Is Wrong On Capital Gains Taxes
file under taxes, Barack Obama, Fred Malek - Fred Malek @ 1:55 pmAn interesting – and quite enlightening – exchange occurred during last night’s debate between Barack Obama and Hillary Clinton.
ABC News moderator Charles Gibson brought up the prospect of raising capital gains taxes.
Here’s part of the back-and-forth with Obama that caught my attention:
GIBSON: You have however said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, “I certainly would not go above what existed under Bill Clinton, which was 28 percent.”
It’s now 15 percent. That’s almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent.
SENATOR OBAMA: Right.
MR. GIBSON: And George Bush has taken it down to 15 percent.
SENATOR OBAMA: Right.
MR. GIBSON: And 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?
SENATOR OBAMA: 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 — $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.
And what I want is not oppressive taxation. I want businesses to thrive and I want people to be rewarded for their success. But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don’t have it and that we’re able to invest in our infrastructure and invest in our schools.
And you can’t do that for free, and you can’t take out a credit card from the Bank of China in the name of our children and our grandchildren and then say that you’re cutting taxes, which is essentially what John McCain has been talking about. And that is irresponsible.
No, it’s not. I disagree with Sen. Obama. Raising the rates for capital gains taxes is a dreadful idea – particularly during troubled economic times.
John McCain’s position is better:
Low taxes on dividends and capital gains promote saving, channel investment dollars to innovative, high-value uses and not wasteful financial planning. John McCain will keep the current rates on dividends and capital gains and fight anti-growth efforts by Democrats.
That’s how we stimulate economic growth. In my opinion, hiking taxes is standard discredited economic folly.
I’d love to know your thoughts. How would increasing the capital gains tax rate affect your investment habits and decisions? If you have a moment, leave a comment.
April 21st, 2008 at 3:41 pm
Hi Mr. Malek,
My name is Jim Brown. I saw the article in today’s Post and I wanted to drop you a line.
You probably don’t remember me, but my brother and I coached your son in a McLean rec. basketball league way, way back—probably in the late 70’s (red jerseys?). My brother and I both were talking about him and that team the other day (we remembered that your boy was a ‘character’ but that he was definitely going to be successful) and then I saw the blog site mentioned so I thought I’d write. We had a lot of fun coaching your son and that team for a couple of years.
Congrats on an unbelievable career built on strong character and honesty. Please give my best to your family and especially young Fred (who’s probably in his 40’s right now and is a major success in his own right).
Keep up the good work on the blog, too!
—Jim Brown
Vice President, Smith Litho
Rockville, MD
April 21st, 2008 at 8:16 pm
Fred,
We’ve run into one another a thousand times at this event or another, yet hardly know one another. I served in the Reagan Administration as Chief of Staff at Labor and earlier, Deputy at OSHA in the dereg days - being pilloried by Ted Kennedy and his gang. And later worked with Dave Wimer, poor guy- with Tom Donohue and Dick Wiley on my Board. I’m now at Patton Boggs (on the “R” side, of course). Enough. My Comment. The point missed, is that Mr. Obama understands, I’m quite sure that an increase in the capital gains tax has nothing to do with increasing revenue. Rather, it is an interesting juxtaposition to his elitist comments in San Francisco. For it is he who plays the fiddle to the haters. He plays to those who, rather than work hard, excel, strive and admire those who can “make it big” and reap the rewards that might come with that - like capital gains - choose instead to resent; to hate, to foment class hatred and believe those who have wealth have it due to luck or through ill gotten gains and that the answer to their own “misfortunes” is a government directed redistribution. Now, I hasten to add that I am not suggesting this is a “democrat” phenomena, or something unique to Mr. Obama. Rather, it has long been a rallying cry useful to bring to a certain type of politician a certain element of the electorate who, rather than work for a better life or simply appreciate the good in what they have, would rather look over the fence and detest the bounty of others, find why it is evil and determine how depriving them of it will only serve the common good - even when the math is bad - as you so eloquently and, frankly, simply illusrate. Mark