From article Capital Gains Taxes and the Democrats. Chris Edwards, Cato. September 27, 2021

October 04, 2021

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President Biden and congressional Democrats are pushing to raise capital gains taxes.

The Democratic proposals are radical and out of step with the treatment of capital gains in other high‐income nations.

Higher capital gains taxes would damage America’s technology industries and entrepreneurial economy.

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In the chart below, the red bar in the middle is the current U.S. top rate of 29.2 percent, which is much higher than the OECD average of 19.1 percent.

These rates, compiled by the Tax Foundation, include both federal and state taxes.

Biden has proposed doubling the top federal capital gains tax rate.

With state taxes on top, BIDEN would HAVE US push the U.S. tax rate up to the highest in the OECD at 48.4 percent.

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Pundits and politicians on the left talk about equalizing the top tax rates on capital gains and ordinary income.

But virtually all OECD nations have substantially lower rates on gains than on ordinary income for good reasons.

By pushing to raise capital gains tax rates, the Democrats are ignoring the best practices of our trading partners, and also ignoring the bipartisan consensus over the past century to keep capital gains tax rates at a moderate level.

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Why are Democrats pushing to raise taxes on capital gains?

The 16th amendment to the U.S. Constitution allowed “taxes on incomes, from whatever source derived,” but it did not define what “income” was.

For a century, liberal and conservative economists have debated the proper definition of income for tax purposes.

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[From yorku.ca: “The basic Haig–Simons definition is income equals the value of a person's annual consumption, plus the net change in the value of her wealth.]

Liberals have been slaves to the idea “Haig‐Simons income” should be the starting point for taxation, and that radical approach would tax all paper gains in all assets every year.

That is the direction that Senate finance chair Ron Wyden is moving, but no other OECD country taxes gains that way.

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Conservative economists have long argued taxing a Haig‐Simons base would damage savings, investment, and growth.

Taxing such a base would also be horrendously complicated and unfair as it would tax people with paper gains but no cashflow.

Conservatives instead favor a definition of income closer to consumption.

Taxing consumption would remove the bias against savings and investment under the income tax, and thus remove an important barrier to growth.

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To the extent we need to tax, we should “tax the fruit of the tree, but not the tree itself.”

That is, taxing the flow of consumption produced by capital assets, not the capital itself that will provide for future consumption.

A Haig‐Simons tax base would hack away at the tree with an ax and destroy fruit production.

Unfortunately, economists on the left don’t see it that way.

(end of article)

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“A Haig‐Simons tax base would hack away at the tree with an ax and destroy fruit production. Unfortunately, economists on the left don’t see it that way.”

Actually, they do see it zat way.

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“Higher capital gains taxes would damage America’s technology industries and entrepreneurial economy.”

“Why are Democrats pushing to raise taxes on capital gains?”

Democrats know higher capital gains taxes deaden the economy and make everyone more poor, it is logic and common knowledge.

So, it’s obvious democrats want to raise capital gains taxes and all taxes because dem actually want to deaden the economy, too much prosperity and happy be anathema to dems.

The negative side wants more misery, the positive side wants more happy.

The positive side cannot nor ever will be able to nor should even try to win over the negative side, unfortunately the universe must be in balance.

All Republican efforts must be to strengthen and embolden our own side, don’t waste time and energy arguing with dems rather must imbue our doubters who be on the edges.

Whichever side tHAT more strongly asserts itself wins over just enough of the slide-side-to-side 5% shapeless-form gangster quarks to achieve a slight but mighty 51% majority.

Byrds/Dylan song My Back Pages

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https://www.youtube.com/watch?v=__L5DOxghD4

Obama says even though capital gains tax revenues went up after capital tax rates went down, he still favors raising the rates “for purposes of fairness.”

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“Fairness” = “having all people equally poor and under thumb of us Dem socialist downlooking kings and queens.”