Because the capital gains tax rate was raised only 33% from 15% to 20% instead of rising 164% to equalize it with the fiscal cliff deal's highest ordinary income tax rate of 39.6% on the richest Americans. Yikes! Can you imagine?
For The Washington Post, here:
"The tax deal Congress passed last week raised the top rate on wages and salaries from 35 percent to 39.6 percent. The rate on income from capital gains and dividends, however, was raised to only 20 percent from 15 percent. There has been no rending of garments nor gnashing of teeth from our super-rich compatriots; they got one sweet deal."
But it's a point conservatives should ponder more because Meyerson writes of common ground we share.
For one thing, there is love of country in Meyerson's article, a desire to see Americans benefit from investment domestically where it throws off all sorts of additional beneficial economic effects, instead of seeing those accrue to communities in foreign lands. American business long ago became unpatriotic in service to the almighty bottom line, which is why your job went to Mexico and then to China. This ushered in a process which has made the American worker more equal to the poverty of the foreign worker, instead of the other way around. But higher taxes on investment capital aren't going to reverse that. Only disincentivizing foreign investment and rewarding domestic investment will, which is a point which illuminates a conservative principle.
When it comes to economic inequality, conservatives should consider Meyerson's observation that the biggest gains overall in recent decades have come in investment income to wealthy investors, not in ordinary income to the rest of us. He doesn't say so, but it illustrates a conservative principle: When you want less of something, tax it. That is precisely what has produced the situation he decries. We have taxed ordinary income exorbitantly compared to investment income and consequently we have less of the ordinary income variety and more of the investment income variety. And we also actually reward foreign investment in the tax code, allowing unpatriated profits to escape taxation. To get more gains in ordinary income, we should equalize tax rates between ordinary and investment income . . . just not at progressive income tax rates. Conservatives should press for a world in which all money is treated the same in the tax code by taxing income of all kinds at one low uniform rate. Income inequality has to begin somewhere, and it begins in the tax code, not in the profits of Warren Buffett.
Similarly with supporting an aging population, it would be nice if there were a little liberal outrage, and a little conservative outrage for that matter, for the way the federal government conspires to suppress interest rates with a weak dollar policy. This punishes savers, but especially the old who expected and need return on capital to take care of themselves instead of depending on government. A strong stable dollar which has the same value when you are 80 as it had when you were 8 is what we need, but sadly our entire class of elites is committed to monetarism, which at its root means the dollar of 2013 could hardly be less equal to the dollar of 1913 than it is.
There is a theme here involving inequality, expressed in lower-wage foreign workers, ordinary income punished with higher relative taxes, and devalued savers' dollars, which could unite liberals and conservatives, and also the country, if only it had an effective advocate in a statesman who had the audacity to point out that big business and big government seem to be joined in common cause against the best interests of the American people. None dare call it fascism.
