U.S. Secretary of State John Kerry and Ambassador Eric Goosby, the U.S. Global AIDS Coordinator, not pictured, meet with Bill Gates at the U.S. Department of State in Washington, D.C., on March 13, 2013. [State Department photo/ Public Domain]
Raising the tax rate on capital gains in the name of generating more revenue or narrowing the wealth gap is a half-baked and incredibly lazy idea.
It’s one thing for Senators Bernie Sanders or Liz Warren to propose soak-the-rich tax policies to rile up their base, but Mr. Gates should know better.
A higher capital gains tax rate will do nothing to narrow the divide between rich and poor, nor will it generate higher tax revenue for the government.
America’s richest wouldn’t stand there and take a sucker punch to their wealth.
The capital gains tax is one of the easiest taxes to dodge.
All that would be accomplished by raising the capital gains tax rate would be to provide a handout to the insurance, accounting and legal professions. Can you imagine what a boon this would be for the folk hawking variable annuities? How about the estate planning attorneys and accountants? Both would be major winners under a higher capital gains tax rate regime.
Bill Gates, Elizabeth Warren and Bernie Sanders all want the rich to pay more taxes, but Gates is saying what the Democratic candidates appear to be thinking: Go for the capital gains rate.
Gates, the billionaire co-founder of Microsoft Corp. and the world’s second-richest man, has suggested that an increase in the capital gains tax rate is the simplest and most direct way to target America’s wealth.
And tax experts say that’s essentially what Senators Warren and Sanders, both seeking the 2020 Democratic presidential nomination, are doing with her wealth tax and his expansion of the estate tax. They’re just packaging it in a way that’s easier to sell on the campaign trail.
Democratic tax proposals are simply a “stealth attack” on the preferential rate for capital gains, said Christopher Faricy, a political science professor focused on tax and inequality at Syracuse University.
Read more here.
Jeremy Jones, CFA
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