Re: Why Should I Vote For Obama?


"Ray" <rayblee@xxxxxxxxxxx> wrote in message
news:54e46390-1178-4d8e-8938-6fe7cd425e08@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Apr 19, 10:54 am, "Chunk" <chunk1...@xxxxxxxxx> wrote:
"Ray" <rayb...@xxxxxxxxxxx> wrote in message

news:376cb333-01f1-420c-9e0d-9b226985cc59@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

On Apr 19, 8:08 am, Carlisle <carrie-...@xxxxxxxxxxxxx> wrote:
Mr. Gibson had noted that higher rates yield less revenue. So the news
anchor tried again: "But history shows that when you drop the capital
gains tax, the revenues go up? Mr. Obama responded that this "might or
might not happen. It depends on what's happening on Wall Street and
how business is going." And then he went on a riff about John McCain
and the housing market.

This is instructive.

Yes, it is.

"The relationship of realizations and receipts to gains tax rates is
neither predictable nor obvious."

Right, but misunderstood. The effects of the tax is should be measured
by
more than just receipts at the treasury.

You are changing the subject Gibson asserted that when you reduce
taxes on capital-gains tax revenues go up - a declaration that you
then dutifully parroted here.

The CBO however in not in agreement with your and Gibson's assertion.


The CBO doesn't support your assertion either. History supports Gibson's
assertion. The CBO quote you cherrypicked is correct but won't support your
assertion. There are certain economic condition where you can have a net
cut or increase in cap gains and not affect revenue. For example, you could
have a low cap rate and have a decrease in revenue associated with a market
deflation. For example, a lot of the Clinton surplus was forecast on cap
gains before the tech bubble. That money never showed up. Or, you could
have very high rates that would depress market transactions. Slight ups and
downs in rates would probably keep revenue static. Basically, markets are
affected by more than just tax rates.


Here's why Obama's increase is punitive and reckless. It is a huge
increase-almost double. The affect on asset markets to that will more than
likely spur a big sell off and you'll see a spike in cap gains revenue as a
result at the old rate (unless the increase is retroactive). After the new
rate sets in, you'll not see much activity. Money will stay locked up and
it won't matter what the rate is. Smart money will wait it out. Couple
that with a confiscatory tax rate on capital and you have decreased economic
activity.



The report also says:

"In general, there is significant consensus that broad-based reductions
in
taxes on capital have the potential to boost economic growth over the
long
run."

The report also qualifies that statement with:

"But the potential for big growth effects from a capital gains tax cut
is much smaller than it is for a more general cut in the tax on
capital."


Your thumb is a small part of your body, why not cut 30% of it off?

Here's the CBO report's complete conclusion:
______________

Revenue estimators are often faulted for the way they project tax
receipts and prepare legislative cost estimates related to capital
gains taxes. But the relationship of realizations and receipts to
gains tax rates is neither predictable nor obvious. And while
reductions in the overall taxation of capital income can measurably
increase economic growth, a cut in capital gains taxes alone is likely
to produce much smaller macroeconomic effects. Inaccuracies in
projecting revenue and disagreements about the effects of tax changes
stem not from a failure to incorporate the behavioral responses of
asset holders but from the complexities inherent in the nature of
gains and gains realizations.
______________

So, Ray, now that you're so well versed in the realm
of cap gains tax rates, explain the benefit of doubling it on retirees,
orphans and widows dependent on pension funds. Or, how about a
struggling
housing market? A bear market? Do you think that would be the "fair"
that
Obama was hoping for?



Why can't you answer these questions? Because you know the answers? Swing
the bat, chump!



Barring more reliable information, I'll take the CBO's word for it
that "The relationship of realizations and receipts to gains tax rates
it neither predictable nor obvious."


That is more or less a caveat to economic theory. It says that there are
exceptions to rules. Your using it to make an exeption a rule and ignoring
trends and evidence to do so (aren't you a scientist!?). Would you bet the
portfolio on it?


.

Relevant Pages

  • Re: Why Should I Vote For Obama?
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  • Re: Save the Bush Tax Cuts
    ... still are the plans to hike taxes on saving and investment that are ... What was the quantitative effect of the 2003 tax ... That combined gross rate of return is the service price ... Japan instituted a capital-gains tax where there had been ...
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