Barack Obama said in an interview, this week, that he thought that a capital gains tax rate of 25% would not be too high. The reporter questioned him on whether that would be a good idea in a time of economic downturn, and he said that Warren Buffet told him that rate would be just fine.
Obama Pushes for Higher Investment Taxes
September 19, 2007 03:02 PM ET | James Pethokoukis | Permanent Link
As part of his "Tax Fairness for the Middle Class" plan, Barack Obama is in favor of nearly doubling the capital-gains tax rate from 15 percent to 28 percent. Leaving the fairness issue aside for a moment—as well as the impact of higher taxes on economic growth—the Obama plan could also be called a "Ways in Which Government Can Collect More Taxes to Pay for New Spending" plan, since Democratic candidates are all scrambling to figure out ways to plausibly pay for new healthcare, education, and infrastructure spending if elected.
But Dan Clifton over at Strategas Research thinks the Dems may be disappointed by the ROT—return on taxes—from higher cap-gains rates. After reviewing the connections between changing cap-gains rates and government revenue during the past five decades, he concludes that higher cap gains could well be a revenue loser for Uncle Sam.