Monday, March 31, 2008
The Wealth Subsidy
With capital gains taxes at a 70-year low, making effective tax rates on wealth lower than that on labor, maybe a little Reagonomics wouldn't be such a bad thing after all:
Reaganís 1981 tax cuts tilted toward the wealthy and made him a supply-side icon. But Reagan could also be fair, and fairness would permeate his last fiscal legacy. In the landmark Tax Reform Act of 1986, nearly three years in the drafting, Reagan again cut marginal rates on earned income but raised taxes sharply on investors.
The reform ended preferential tax treatment of capital gains. The tax rate on long-term gains leapt to 28 percent, nearly double the current levy.†
John McCain is quick to assume Reagan's mantle, but doesn't want to touch this one with a ten-foot pole. Making the issue one Barack Obama could win for the Gipper.