As discussed yesterday, the most important number in Obama’s budget is that the burden of government spending will be at least $2 trillion higher in 10 years if the President’s plan is enacted.
But there are also some very unsightly warts in the revenue portion of the President’s budget. Americans for Tax Reform has a good summary of the various tax hikes, most of which are based on punitive, class-warfare ideology.
In this post, I want to focus on the President’s proposals to increase both the capital gains tax rate and the tax rate on dividends.
Most of the discussion is focusing on the big increase in tax rates for 2013, particularly when you include the 3.8 tax on investment income that was part of Obamacare. If the President is successful, the tax on capital gains will climb from 15 percent this year to 23.8 percent next year, and the tax on dividends will skyrocket from 15 percent to 43.4 percent.
But these numbers understate the true burden because they don’t include the impact of double taxation, which exists when the government cycles some income through the tax code more than one time. As this chart illustrates, this means a much higher tax burden on income that is saved and invested.
The accounting firm of Ernst and Young just produced a report looking at actual tax rates on capital gains and dividends, once other layers of tax are included. The results are very sobering. The United States already has one of the most punitive tax regimes for saving and investment.
Looking at this first chart, it seems quite certain that we would have the worst system for dividends if Obama’s budget is enacted.
The good news, so to speak, is that we probably wouldn’t have the worst capital gains tax system if the President’s plan is enacted. I’m just guessing, but it looks like Italy (gee, what a role model) would still be higher.
Let’s now contemplate the potential impact of the President’s tax plan. I am dumbfounded that anybody could look at these charts and decide that America will be in better shape with higher tax rates on dividends and capital gains.
This isn’t just some abstract issue about competitiveness. As I explain in this video, every single economic theory – even Marxism and socialism – agrees that saving and investment are key for long-run growth and higher living standards.
So why is he doing this? I periodically run into people who are convinced that the President is deliberately trying to ruin the nation. I tell them this is nonsense and that there’s no reason to believe elaborate conspiracies.
President Obama is simply doing the same thing that President Bush did: Making bad decisions because of perceived short-run political advantage.
Reblogged this on American Freedom.
Greece is on the other end of the spectrum. Probably not a great role-model either.
The video is blocked at work unfortunately. But you have to wonder at what point America stops becoming competitive because of politicking.
President Clinton had it right back in 1993 to use an energy tax. From those revenues we could rid of all the taxes that screw up economic incentives or create better policies. Here is one–Get rid of the corporate taxes on firms that bring jobs back to America. An energy tax would get us out of harm’s way in all those areas of the world ripe with conflict too and would let people decide freely such things as where to live, to commute, or which car to buy. Instead we get crammed down CAFE standards which will dictate vehicle size safety etc.
“How Can Obama Look at these Two Charts and Conclude that America Should Have Higher Double Taxation of Dividends and Capital Gains?”
Because aren’t #1 yet. He always says he doesn’t want other nations to beat us.
If the people are attracted to policies that will make them similar to the rest of the world in spirit, and thus on prosperity, those who can become very famous by supplying the service will be found and put in office.
Obama happens to be one of them. The American people are now ripe to hear the message of decline? Obama happens to be the one who provides the sought service and becomes one of the most powerful people in the world doing it. There are so many people willing to provide this service that the American people need not choose someone who simply promotes the policies of decline for purely self serving purposes. With so many willing to provide the services of decline, the American people can choose one who both promotes the policies of decline as well as believes in them himself — or is also simply good enough of an actor to pretend he does.
My speculation is that Obama is simply a megalomaniacal personality that wants as much fame as possible. Whether good or retrospectively in a few decades bad is probably secondary to him, inebriated by the current limelight.
Besides, the European experience shows that people do not figure out the reasons for their decline. Watch Europeans rest their hope for survival on an even flatter effort-reward curve.
In short, the American cultural gap (advantage in my mind) to the rest of the world is now finally sufficiently thin that Americans are ready for the final leap into the vicious cycle of decline. I think this is going to be the American generation that finally does it. Spend some time studying how to make the most in a French environment. Once the vicious cycle takes hold, transformation will be very quick on a historical time scale. The pace of human evolution is ever accelerating. Declines that used to take 300 years will be concluded in 30 in the future.
How can Obama make such a non-sequitur conclusion?
That’s a very good question. It depends if you expect him to be faithful to his terms of office and the constitution. Yes, he may have taken an oath, but that clearly means nothing.
When you recognize he is subject to the Public Choice theory – people in government behave in ways that maximize their self interest – that addresses his willingness to do and promise anything to get re-elected.
But that doesn’t explain everything. This suggests he must have a hidden agenda, I wonder what it could be? I wonder what the real reasons were for him being given the Nobel Peace Prize and its $1,000,000? Has he been bought? If so by whom? And what is their agenda?
Former Presidents like Bill Clinton or VPs like Al Gore have gone on to make really big dollars once out of office. The same will happen with Obama. Jimmy Carter is somewhat of an exception. A political failure as it turns out, but he did see being President as the only thing one should aspire to do on the planet and then rake it for every dollar he could get. He has some real humanity. Yes he did go places and do things that most of us will never get a chance, and some were way out there, but I think Carter and Ford were the last Presidents who were not in for money or their own simple ego. History will judge Obama more correctly than popular opinion of today. But he seems off to a rough start. Health care reform, stimulus, and the green policy agenda were his top priorities in 2009 when in fact the economy was JOB ONE in the public’s eye. That seems to be a big misread.
Woops “but he did see being ” should really say “but he did not see being”
[...] been a big critic of Obama’s policies on taxes, spending, regulation, and intervention, so you won’t be surprised that I argued on CNBC that [...]
[...] more worrisome, the U.S. tax rates on dividends and capital gains already are higher than the equivalent rates in Greece. Yet Obama wants to boost double taxation on these forms of retained earnings and distributed [...]
[...] Mitchell: I’ve been a big critic of Obama’s policies on taxes, spending, regulation, and intervention, so you won’t be surprised that I argued on CNBC that his [...]
[...] budgets in Washington, and given Obama’s support for class warfare, higher tax rates, and double taxation, this image I received seems rather [...]
[...] As a result, a “grand bargain” would be more likely to result in an increase in the (already onerous) double taxation of income that is saved and invested rather than the elimination of genuine [...]
[...] of my big points was that the United States already has a self-destructive set of tax laws for investment. As such, it would be very foolish to increase the double taxation of income that is saved and [...]
OMG another Bush-equivacator.
When is somebody going to expose these corrupt dims like Peloser, Harry Fraud, Bawney and Dud plus Oblaba and show what they have done to bankrupt this country?
[...] of my big points was that the United States already has a self-destructive set of tax laws for investment. As such, it would be very foolish to increase the double taxation of income that is saved and [...]
[...] The corporate tax rate is higher in the United States than in any European country, and the double taxation of dividends and capital gains also is far above the European average. Western European nations tend to impose higher tax rates on personal income, so the overall tax [...]
[...] wonder Ernst and Young found that the United States has a very anti-competitive system for taxing dividends and capital gains. (perhaps it’s time to copy the clever British [...]
[...] proposing big increases in the double taxation of capital gains. And something to consider since he wants America to have the highest level of dividend double taxation in the industrialized world. Rate this: Share this:PrintEmailFacebookTwitterMoredeliciousDiggFarkLinkedInRedditStumbleUponLike [...]
[...] Something to think about with the President proposing big increases in the double taxation of capital gains. And something to consider since he wants America to have the highest level of dividend double taxation in the industrialized world. [...]
[...] Some clever person already has put together some potential starring roles. Let’s start with the Wizard of Oz, with some updated dialogue that captures the President’s approach to tax policy. [...]
[...] Some clever person already has put together some potential starring roles. Let’s start with the Wizard of Oz, with some updated dialogue that captures the President’s approach to tax policy. [...]
[...] so there’s nothing remotely close to the punitive tax laws that America has for interest, dividends, capital gains, and [...]
[...] Or look at this chart showing the extensive double taxation in our tax code, as well as these international comparisons of how America over-taxes dividends and capital [...]
[...] of my big points was that the United States already has a self-destructive set of tax laws for investment. As such, it would be very foolish to increase the double taxation of income that is saved and [...]
[...] issue on Fox News. In my first soundbite, I warn that expatriation is driven by a combination of punitive tax policy and a growing perception that America will suffer a Greek-style fiscal crisis thanks to poorly [...]
[...] Some clever person already has put together some potential starring roles. Let’s start with the Wizard of Oz, with some updated dialogue that captures the President’s approach to tax policy. [...]
[...] issue on Fox News. In my first soundbite, I warn that expatriation is driven by a combination of punitive tax policy and a growing perception that America will suffer a Greek-style fiscal crisis thanks to poorly [...]
[...] the double taxation of dividends and capital gains is nearly the worst in the world (and will get even worse if Obama’s class-warfare proposals are [...]
[...] the double taxation of dividends and capital gains is nearly the worst in the world (and will get even worse if Obama’s class-warfare proposals are [...]
[...] America already has pervasive double taxation, as illustrated by this flowchart, and this post shows that Obama’s policies would make a bad situation even worse. [...]
[...] argument, mostly because the WSJ’s editorial didn’t focus on that subtopic. But check out this post to see how Obama’s policy is putting America at a significant disadvantage. Rate this:Share [...]
[...] plan would increase the double taxation of dividends and capital gains. The U.S. already has a very anti-competitive system and this would be a step in the wrong direction (though ameliorated by a lower corporate tax [...]
[...] plan would increase the double taxation of dividends and capital gains. The U.S. already has a very anti-competitive system and this would be a step in the wrong direction (though ameliorated by a lower corporate tax [...]
[...] wonder Ernst and Young found that the United States has a very anti-competitive system for taxing dividends and capital gains. (perhaps it’s time to copy the clever British campaign [...]
[...] the double taxation of dividends and capital gains is nearly the worst in the world (and will get even worse if Obama’s class-warfare proposals are [...]
[...] when you factor in the taxes at both the personal and business level, these charts show that France already has the highest tax on dividends in the developed world and the third-highest tax on capital. And [...]
[...] video also makes good points about double taxation, class warfare, and the Laffer [...]
[...] video also makes good points about double taxation, class warfare, and the Laffer [...]
[...] to expire at the end of the year. This means higher tax rates for all taxpayers, as well as increased double taxation of dividends and capital gains. …that fiscal cliff would be bad news, it’s not the worst possible outcome. President [...]
[...] And we have a lot more cronyism and interventionism, which undermines economic efficiency. To make matters worse, Obama wants higher tax rates and more double taxation of saving and investment. [...]
[...] The bad fiscal cliff is the automatic tax hike, which exists because the 2001 and 2003 tax cuts are scheduled to expire at the end of the year. This means higher tax rates for all taxpayers, as well as increased double taxation of dividends and capital gains.” [...]
[...] You won’t be surprised to learn that I’m mostly concerned with how the issue gets resolved. Yes, there is some temporary uncertainty that is probably making markets skittish, but I’m much more worried about Obama bullying the GOP into agreeing to a class-warfare deal that leads to higher tax rates on investors, entrepreneurs, and small business owners, as well as more double taxation on saving and investment. [...]
[...] entrepreneurs, small business owners and other “rich” taxpayers. And he wants more double taxation of dividends and capital gains. And a higher death tax rate, even higher than the ones imposed by France and [...]
[...] on investors, entrepreneurs, small business owners and other “rich” taxpayers. And he wants more double taxation of dividends and capital gains. And a higher death tax rate, even higher than the ones imposed by France and [...]
[...] I want to get rid of the double taxation of dividends and capital gains in part because these reforms will boost business [...]
[...] I want to get rid of the double taxation of dividends and capital gains in part because these reforms will boost business [...]
[...] even though the United States already has a very anti-competitive system – as shown by these two charts, some folks think that the tax rate on capital gains should be even [...]
[...] double tax on dividends and capital gains will climb from 15 percent to 20 percent (23.8 percent if you include the Obamacare tax on [...]
[...] There’s almost no double taxation. The payroll tax applies to wage and salary income, as well as personal earnings from business activities (sometimes known as “Schedule C” income). But dividends, interest, and capital gains are generally spared – other than the 3.8 percent Obamacare surtax. [...]
[...] the double taxation of dividends and capital gains is nearly the worst in the world (and will get even worse if Obama’s class-warfare proposals are [...]
[...] even though the United States already has a very anti-competitive system – as shown by these two charts, some folks think that the tax rate on capital gains should be even [...]
[...] parts of our tax system. We also have the world’s highest corporate tax rate and we also have very high tax burdens on dividends and capital gains (and the tax rates on both just got worse thanks to the fiscal cliff [...]
[...] There’s almost no double taxation. The payroll tax applies to wage and salary income, as well as personal earnings from business activities (sometimes known as “Schedule C” income). But dividends, interest, and capital gains are generally spared – other than the 3.8 percent Obamacare surtax. [...]
[...] double taxation of saving and investment since every economic theory agrees that capital formation is key to long-run [...]
[...] that lead to more wasteful spending by state and local governments, while simultaneously imposing punitive forms of double taxation on saving and investment in the private [...]
[...] The double tax on dividends and capital gains climbs from 15 percent to 20 percent (23.8 percent if you include the Obamacare tax on investment income). [...]
[…] plan would increase the double taxation of dividends and capital gains. The U.S. already has a very anti-competitive system and this would be a step in the wrong direction (though ameliorated by a lower corporate tax […]