Rahm Emanuel, Wall Street Journal
This is really great, as far as it goes. I agree with much of it.
The trouble with it is that it is unimaginative about investment, which is to say Rahm Emanuel looks only at what affects his proposals might have to hobble investment, not at what would turbocharge investment, specifically domestic investment.
He says not one word about how the Reagan Tax Revolution sabotaged the arbitrage which used to exist between higher ordinary income tax rates and lower and longer capital gains tax rates, the arbitrage which fueled domestic investment growth before globalization lured capital away.
Rahm wants to raise revenues by raising the current capital gains tax rate of 20% closer to the current ordinary income tax rate near 28% when what he should be doing is proposing a mechanism to ensure more of that investment is domestic and he doesn't.
He claims to be most interested in restoring the real growth which followed upon the 1986 tax reform, but he ignores the fact that rates of growth have steadily fallen since then.
The gap between real GDP growth to 1984 extrapolated to the present time and the actual real GDP growth since 1984 is today $11 trillion.
That's $11 trillion which could have been taxed to fund the spending which has otherwise put us $40 trillion in the hole.
The long term consequences of the Reagan Revolution have been not just a fiscal disaster, but a growth disaster.
America needs more Democrats like Rahm Emanuel who are t h i n k i n g.
