You are currently viewing the printable version of this article, to return to the normal page, please click here.

MILLER: Encouraging investment in America

The capital-gains tax should be capped and eliminated

Question of the Day

What has been the biggest debacle on Obama's watch?

View results

Our nation is headed into a double-dip recession. The situation lends urgency to the political debate over whether investors should be rewarded or punished. The economy will have no hope of recovery so long as Washington insists on crushing the entrepreneurial spirit with a capital-gains tax that's about to go up substantially.

Republican presidential candidates sparred over the issue in New Hampshire on Tuesday. Newt Gingrich, who wants the tax eliminated, asked rival Mitt Romney why his economic plan limited the capital-gains tax rate cut to people who make less than $200,000.

Mr. Romney blamed President Obama. "The reason for giving a tax break to middle-income Americans is that middle-income Americans have been the people who have been most hurt by the Obama economy," said the former Massachusetts governor. "If I'm going to use precious dollars to reduce taxes, I want to focus it on where the people are hurting the most, and that's the middle class."

The blame for the unfortunate use of income brackets in the capital-gains tax rests on President George W. Bush. In 2003, Mr. Bush's tax cut reduced the capital-gains rate from 20 to 15 percent, but it also created a second capital-gains bracket of zero percent for households whose ordinary income tax rate fell below 15 percent. That enables class war-mongers to increase the top capital-gains tax rate by claiming the change only affects "the rich."

The Bush tax rates expire on Dec. 31, 2012, after which the rate will return to 20 percent. But that's not all. Qualified dividends, which are now taxed at 15 percent, will be taxed at the marginal income tax rate, which could be as high as 39.6 percent.

In addition, Obamacare introduced a 3.8 percent tax hike on all investment income, including capital gains, which kicks in when the cuts expire. For those earning at least $200,000, the jump from 15 to 23.8 percent is huge. Mr. Romney's campaign spokesman confirmed he wants to stop the scheduled rate hike.

Republican presidential candidate Herman Cain's "9-9-9" economic plan would go a step further and eliminate the capital-gains tax entirely and make up the revenue with a national sales tax. He described the tax during the debate as, "a big wall between people with ideas and people with money."

Rep. Peter Roskam, Illinois Republican, introduced another option last week. His legislation would permanently cap the capital-gains and dividend tax rates at 15 percent.

"A critical step toward creating a competitive, stable environment for American job creators is preventing drastic tax hikes, especially while our economy is facing near double-digit unemployment," the chief deputy whip told The Washington Times. "These rates not only affect businesses but also families, senior citizens and investors of all sizes, all of whom would directly feel the effects of dramatic tax increases."

While some disagree about how much or how fast the capital-gains tax should change, Republicans are agreed that the rate needs to be lower. Mr. Obama, on the other hand, wants to see the rate go up. The capital-gains tax is a barrier to restoring the United States to economic strength. It has to go.

Emily Miller is a senior editor for the Opinion pages at The Washington Times.

© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.

Comments
blog comments powered by Disqus
TWT Video Picks
You Might Also Like
  • Maureen McDonnell looks on as her husband, former Virginia Gov. Bob McDonnell, made a statement on Tuesday after the couple was indicted on corruption charges. (associated press)

    PRUDEN: Where have the big-time grifters gone?

  • This photo taken Jan. 9, 2014,  shows New Jersey Gov. Chris Christie gesturing as he answers a question during a news conference  at the Statehouse in Trenton.  Christie will propose extending the public school calendar and lengthening the school day in a speech he hopes will help him rebound from an apparent political payback scheme orchestrated by key aides. The early front-runner for the 2016 Republican presidential nomination will make a case Tuesday Jan. 14, 2014, that children who spend more time in school graduate better prepared academically, according to excerpts of his State of the State address obtained by The Associated Press. (AP Photo/Mel Evans)

    BRUCE: Bombastic arrogance or humble determination? Chris Christie’s choice

  • ** FILE ** Secretary of State Hillary Rodham testifies on Capitol Hill in Washington, Wednesday, Jan. 23, 2013, before the Senate Foreign Relations Committee hearing on the deadly September attack on the U.S. diplomatic mission in Benghazi, Libya, that killed Ambassador J. Chris Stevens and three other Americans. (AP Photo/Pablo Martinez Monsivais, File)

    PRUDEN: The question to haunt the West

  • Get Breaking Alerts