11:00 AM EST, January 28, 2012
In his State of the Union Address, President Obama barely touched on the country's soon-to-be $16 trillion national debt, massive joblessness, entitlement insolvency, economy-crippling government regulations and the other compelling issues ("Obama targets economy, taxes in address," Jan. 25).
Sounding like an Occupy Wall Street interviewee, he once again attributed virtually all of the country's ills to the supposed failure of "millionaires and billionaires" to pay their "fair share." Specifically, he is troubled that those with the greatest income pay only a 15 percent tax rate on their long-term capital gains and proposes that their rate be doubled to 30 percent.
The president's position is as fatuous as it is incoherent.
Unlike their investment profits, the ordinary earned income of the rich is taxed at a higher rate than 30 percent. Their invested funds are most often derived from those earnings, which have already been taxed at the higher rate. Moreover, their investments in most cases have already been indirectly taxed as corporate profits subject to a 35 percent rate, one of the highest in the industrialized world.
Any increase in revenues from this increase would likely be insignificant, especially considering that it would no doubt drive many investors offshore. Germany, Holland, Mexico, India and numerous other countries have no capital gains taxes. Many others, including Canada, China and Japan, have rates much lower than 30 percent.
Little more than a year ago, as the president was approving an extension of the Bush-era tax cuts, he agreed that increasing taxes in the midst of a fragile recovery was a bad idea. Unless I've somehow missed the new economic boom, it still is.
Barry C. Steel, Phoenix
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