"Can you make an absolute, read-my-lips pledge that there will be no tax increases of any kind for anyone earning under $200,000 a year? And if the economy is as weak a year from now as it is today, will you persist in your plans to roll back President Bush's tax cuts for wealthier Americans?"The assumption would seem to be that there's something economically or politically dangerous about raising taxes, particularly on the wealthy. Charles Gibson picked up on that theme, pressing Obama about his plan to raise capital gains tax rates to levels of the early 1990s—a position that struck Gibson as bizarre, since lowering these taxes increases government revenue:
"In each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?"This question rests on two false assumptions. The capital gains tax is paid by a small percentage of the population. As Citizens for Tax Justice pointed out (3/16/06), "The wealthiest 10 percent of taxpayers enjoyed 90 percent of the capital gains eligible for this special tax break." Gibson's reference to the 100 million Americans who own stock is irrelevant, since this tax is applied to the sales of stocks and real estate—not the act of having a retirement account.
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This story was published on April 18, 2008.