“PERMANENT MARGINAL INCOME AND CAPITAL GAINS TAX RATE CUTS.”
I’ll go along with you on half of that. The capital gains rate is already low comparatively speaking. The marginal tax rate on someone who is upper middle class and who works to earn a dollar is somewhere around 38-45% when you add in social security and state taxes. Said another way, someone who earns a dollar pays 38-45 cents in taxes whereas someone who has a capital gain pays 15-20 cents, tops. That’s a significant disparity that is unjust.
When the effective marginal tax rate on earnings is dropped to somewhere in the region of capital gains, then I’ll be interested in hearing about the need for a further capital gains tax cuts.
What is unjust is that a guy who pays all his taxes on his earnings and has a little left over to invest pays ANYTHING on the earnings from investments he could only make after HAVING PAID INCOME TAXES ALREADY.
What about an investment that goes up say 3% per year. Must he pay taxes on that when he sells, even though inflation ate up all those gains? Yes, he must pay taxes on inflation, even though he is not better off. Is that "just?"
Then he gets to pay again when he's dead. And the companies in which he invests pay taxes on their income.
How many layers of taxation are you in favor of? Three? Four? Five?
The economically correct tax rate on capital gains is ZERO. Ask among economists. That will both maximize growth, and maximize revenue to the Treasury, because rampant investments cause employment, productivity growth, income growth and income tax growth. Capital gains taxes just get in the way of that virtuous cycle.
That may seem unjust, but a spread like that is absolutely necessary to compensate someone for taking the higher risks associated with major capital ventures.
Consider the example of someone with $10 million in his pocket who can either "save" it (i.e., put it in a bank account or buy U.S. Treasury securities) or "invest" it (i.e., start a company, buy an office building, etc.). The latter approach carries much more risk, but it also generates a lot more economic activity. Hence, the need to provide that someone with a tax incentive to "invest" his money instead of "saving" it.