Thursday, July 17, 2008

Senator Obama's Capital Gains Tax Plan

Presumptive Democratic presidential nominee Senator Barack Obama (D-IL) supports raising the capital gains tax from 15% to 25%, an increase of 67%. Economic growth is determined by a nation's investment in both human and physical capital. An increase in the capital gains tax will reduce investment in the stock market and reduce future economic growth.

Many believe that an increase in the capital gains tax will only affect the "wealthy" or Wall Street stockbrokers. However, virtually all citizens are affected by an increase in capital gains taxes. Pensions and 401k plans are directly affected by the capital gains tax and the direction the stock market takes in response to the tax. All citizens are affected by lower economic growth that results from low investment. If Senator Obama wants to raise the standard of living for Americans, he should abandon his plan to raise the capital gains tax.

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