[FoRK] Obama: communitarian, redistributionist, confused? (from NYT)

J. Andrew Rogers andrew at ceruleansystems.com
Tue Aug 26 00:24:41 PDT 2008


On Aug 25, 2008, at 9:02 PM, Bill Humphries wrote:
> http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html
>
> This a side by side of McCain and Obamba's (as of June) tax proposals.
>
> I have no idea if Andrew and/or Bone are really in that top bracket,  
> but there are worse fates.


Short term, I actually benefit from Obama's tax proposals.  That does  
not make them less stupid on both pragmatic and theoretical grounds,  
and I object to them on that basis.  Not that McCain's proposals are  
brilliant -- far from it -- but they are more along the lines of the  
milquetoast political compromises we are already accustomed to.  No  
damage will come of them that has not already occurred for the last  
twenty years.  A bold move would be slashing the capital gains to zero  
and picking it up when it shows up as income tax -- the math is  
attractive and rational, if ideological abhorrent regardless of results.

But succinctly, Obama's capital gains tax proposals border on militant  
ideological stupidity, which tells you most of what you need to know.  
I do not think even most doddering Keynesian's economists would say  
that is a good idea, never mind a competent economist, because there  
is no economic model where massively increasing such taxes does not  
cause Bad Things to happen in a vaguely modern economy even when  
offset by lower income taxes.  The Europeans are not stupid, and got  
that part right.  They structure their taxes to put the burden on  
those segments that damage the economy the least for a given level of  
taxation, which means avoiding capital gains taxes to the extent  
possible given their aggregate tax rates. Anyone who can propose such  
a transparently broken idea to pander to populists loses all  
credibility on economic issues.

When a politician has a tax platform based on massively raising  
capital gains tax, you can be pretty damn sure that the reason is  
blindly ideological and not pragmatic, because outside of some weak- 
sauce populist arguments that do not survive scrutiny, there is little  
*economic* rationale for raising such taxes, at least not in the sense  
that they will benefit anyone.  You could raise the same taxes on  
income or consumption while visiting far less damage on an economy,  
but clearly damage to the economy was not an overriding concern.


You cannot suddenly take a big chunk of the private capital out of the  
US economy without bad things happening, even under the most  
optimistic scenarios.  No amount of optimism will cover for that epic  
blunder.  And under no scenario does the economy going down the  
crapper benefit Average Joe.

Cheers,

J. Andrew Rogers





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