Letter to the Editor
Capital gains taxes
Tuesday, October 23, 2012
Let me give a single reason to support the President's re-election: tax policy matters.
The key issue here is why we tax capital gains at a lower rate than we tax earned income. If you work in retail and make $15 per hour or at McDonalds and make $7.35 per hour you are taxed at 15 percent. If you make more earned income you are taxed up to 35 percent.
But if you are rich enough to have money lying around to invest you are taxed at 15 percent. That is the "capital gains" rate. This makes no sense. Working people pay a higher tax rate than rich people. Is the argument that this investment money is needed to fund new businesses? Sure it is. So what? Rich people have to put their money someplace and they are going to invest it even if they have to pay 35 percent on gains. Remember, this money isn't being taxed twice. You don't get taxed again on the money you invest. You only get taxed on the gain you have from that invested money.
There is no rational basis for taxing capital gains at a lower rate than what you tax for those who have to earn with their backs.
The "carried interest" rule is even worse. It says that hedge fund managers and Wall Street bankers can invest other people's money, taking no risk themselves, and then be taxed on their profit at the capital gains rate of 15 percent. That's why Bain Capital partners only pay 15 percent.
Tax policy matters.
JOHN L. COOK, Cape Girardeau