Meanwhile, Senator Obama on Capital Gains

By February 4, 2008Economy, Taxation

Timely story in today’s Barron’s outlining Senator Barack Obama’s position on tax policy, based on an interview with Austan Goolsbee, a University of Chicago professor who advises Obama on the economy. Goolsbee says Obama would raise most rates on dividends and capital gains from their current top of 15 percent to between 24 percent and 25 percent with the goal of generating new revenue and paying for middle-class tax simplification.

TO INSURE AGAINST A NEGATIVE impact on innovation and new business formation, Obama would have a zero rate on capital gains for entrepreneurs, venture capitalists and small-business owners forming new enterprises.

“He is being careful not to disturb innovation,” said Goolsbee. Most of the highest taxes, he says, would fall on “gains from the past.”

Because innovation comes only from only entrepreneurs, venture capitalists and small-business owners?

Join the discussion 2 Comments

  • Dave Hepler says:

    I am a self employed musician(entrepreneur). In 2007 I grossed about $50,000 working my tail off. After deductions my income was about 40,000. I live conservatively and at age 51 desperately need what little portfolio investments that I have to grow to their potential. To have Obama wamting me to pay more capital gains taxes is not only grossly unfair to me but will make it much more difficult for me to have any kind nest egg in 13 years.

  • R Black says:

    Were capital gains taxes to increase (ie double!) under any new tax policy, I would imagine that many US investors in US and foreign stocks would flee from the market with any realized gains as fast as possible and prior to any tax law change.
    Can you imagine what this would do to an already depressed stock market and to any future investing? Simple. Get out of the market, invest (if at all) in non taxable securities, and lay low! What a disaster for the individual investor and for the market in general! I hate to sound like a doomsday sayer, however, in the current rather pessimistic economic outlook scenario, tighter money, reduced spending, the likelyhood is that less enthusiasm from individual investors to invest in our economy and less income will have a huge negative impact on the economy. With less disposable income, albeit capital gains income, reduced spending secondary to reduced gains will only aggravate any recession that may be bound in some way to occur anyway.
    Costs for health care reforms may need to be funded from somewhere, but not at the risk of further lowering people’s income, whether investment income or not. Perhaps the billions spent on the military?

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