In today’s Times we get an article decrying an inequality in the tax code. Capital gains is only taxed at 15% while the highest income tax is over twice that. I agree with the Times at this point, but of course it’s the solution to this inequality that highlights them as socialists
The deeper question in all this is whether capital gains — which are currently taxed at less than half the top rate of ordinary income — should continue to be so lavishly advantaged. The answer there is no. Today’s preferential rate for capital gains is excessive, with no mechanism in the tax code to ensure that it is not overused. Excessively favoring one form of income over another encourages wasteful gamesmanship, creates inequity and crowds out other ways to foster risk-taking. Tackling the too-easy tax terms for private equity is a good way for Congress to begin addressing that bigger issue.
Their solution is to, of course, raise the capital gains tax, why?
In general, when corporate executives get performance-based pay, like stock options, they don’t have to pay tax right away. That’s a big tax benefit, but it leaves the government no worse off because the corporation also delays taking a deduction for the payment. There is no such offset when private equity partners are paid by tax-exempt investors.
That’s right, when the Times discovers an inequality in the tax code it’s first interest is in making sure the government is taken care of. It’s practically the definition of socialist. It’s a mindset that just boggles me. The rights and interests of the people aren’t even a factor. The fact that the government can abscond with the income of it’s citizens, at any rate it chooses, is a violation of our rights of the highest order yet the Times wants to make sure the bureaucracy isn’t shorted.
To the Times I say: Piss off.