Obama's Capital Punishment

In a speech in Sarasota, Florida on Thursday, Barack Obama said he "will eliminate capital gains taxes for small businesses and start-up companies that are the engine of job creation in this country." Sit back and think about that for a minute, especially in combination with what he said to Joe the Plumber. What does Obama think the goal of someone who starts a small business is? To stay small? How much clearer could Obama be that he does indeed want to punish success? As I've said before, an Obama victory will show two things: First, that Americans have little understanding of even basic economics, and second that the GOP has utterly destroyed their brand...both of which are undeniably true. How about a little thought experiment? Let's say Obama's definition of "small business" is one with profits of $250,000 or less, or one with some amount of revenue or less or some number of employees or less. Given Obama's rhetoric, it's likely that the jump in capital gains tax rate (or any other tax which Obama will use to punish success) will be large at that threshold value. So the business owner has great incentive to get the business to that level, but no higher, keeping him from creating more jobs, generating both economic activity and tax income for the government. Or imagine that the business owner wants to sell the business and retire in a few years. But if he grows the business any more, it will pass the Obama punishment threshold and he'll end up having basically built the business for nothing because the growth will have been pilfered by the Democrats. Therefore, he sells the business three years early, causing him to lose three years of productivity, three years of income, and basically three years of doing what he wanted to do with his life. The problem with "progressive" economics is that it leads to outcomes directly opposite to those which progressives claim to care about, namely better financial situations for people of modest incomes. Punishing success will simply cause those people to be unable to find work, whereas the rich or nearly-rich would-be-entrepreneur can just keep his cash in the bank...or in municipal bonds so he doesn't pay any income tax...and be worse off than he would have been but not nearly as much worse off as the person who really needed that job. There is a reason that data show capital gains revenues to the government to rise when the capital gains tax rate is cut. But when pressed about that in an interview a few months ago, Obama's answer is that he'd still raise the capital gains rate "in the interest of fairness". That was probably the first major publicly-recognizable clue that Barack Obama is a committed socialist: He wants to attack the rich even if it means the government gets less money. It's shocking that more hasn't been made of it, but between the disgusting pro-Obama bias of the media and the lack of curiosity on economic issues by Americans except during the worst possible times, the importance of Obama's admission was missed by most. I guarantee you that even low-income people won't miss the point when they can't find a job because the Democrats want to punish the rich. For small business, Obama is indeed "capital punishment". As they say, people get the government they deserve. It's too bad the rest of us are going to have to suffer through the government that California, Massachusetts, and Boulder deserve.
  • Abe
    Comment from: Abe
    11/01/08 @ 11:34:16 am

    I agree that it is bad economics. But the tax rates he proposes are similar to President Clinton, are they not? I doubt we'll have economic collapse in an Obama Presidency.

  • Mister Guy
    Comment from: Mister Guy
    11/01/08 @ 02:19:52 pm

    "especially in combination with what he said to Joe the Plumber." Oh, you mean the guy who asked a question that based on a set of falsehoods?? "What does Obama think the goal of someone who starts a small business is?" Probably to make money doing something that they like to do. "How much clearer could Obama be that he does indeed want to punish success?" Pretty murky here. "that Americans have little understanding of even basic economics" LOL...like YOU'VE shown any?? "it's likely that the jump in capital gains tax rate (or any other tax which Obama will use to punish success) will be large at that threshold value." Why...where does he *actually* say that?? "The problem with 'progressive' economics is that it leads to outcomes directly opposite to those which progressives claim to care about, namely better financial situations for people of modest incomes." Tell that to the millions that benefited from Democratic policies in the 1990s. "That was probably the first major publicly-recognizable clue that Barack Obama is a committed socialist" Nope, it was an admission that he believes in a very porgressive tax system, which you don't. "I guarantee you that even low-income people won't miss the point when they can't find a job because the Democrats want to punish the rich." The scare tactics aren't working BTW.

  • Comment from: Rossputin
    11/01/08 @ 03:40:54 pm

    I'll respond point by point: The question and answer around Joe the Plumber were highly revealing about Obama regardless of Joe's personal circumstances. Even if he was lying completely about his future, which he wasn't, it was still an important event. It's only liberals who think that the situation is about Joe rather than about Obama. Starting a small business: Obama may think that's what someone wants to do but clearly he doesn't care since he wants to punish anyone who makes...well who knows how much anymore since the number keeps changing? Murky? It's not murky that he wants to punish success. Everything about Obama's history is about taking money from people who are even modestly successful. My understanding of economics is pretty damn good, having studied a lot of it and then worked in financial markets for more than 20 years. I'd be happy to compare my knowledge to yours any day. Why will jump in cap gains rate be large? Well, he already said he wants to raise it either 33%, from 15% to 20%, but left open the possibility that it's just a first step to raising it 87%, from 15% to 28%. EVEN WHEN TOLD THAT DOING SO WOULD COST THE GOVERNMENT MONEY. You must be kidding: The major "Democratic" policy of the 1990s which people benefited from was welfare reform which Bill Clinton vetoed twice before Dick Morris told him it would probably cost him re-election if he did it again. The other "Democratic" policy which was great for the country was when Clinton signed a cut in the capital gains rate from 28% to 20%, bringing substantial benefit to markets and the economy. Obama is a socialist. One of the key tenets of the Communist Manifesto is a strongly progressive tax code. We currently have the most progressive tax code in our history and he says it's not nearly progressive enough. Furthermore, it appears he was a member of the socialist New Party in Chicago in the 1990s, but even if he wasn't, he was endorsed by them...and they only endorsed socialists. Suggesting poor people will be Obama's real victims is not meant as a scare tactic, just as a likely outcome that might happen to be scary for low-income people. Part of me wants it to happen so people are reminded what happens when economic idiots like Obama and his followers like you are given control of the country.

  • Mister Guy
    Comment from: Mister Guy
    11/01/08 @ 11:04:34 pm

    The issue with the infamous "Joe the Plumber" has nothing to do with "Joe's personal circumstances". I honestly think that Joe (Sam, whatever) asked his question thinking that he actually could buy a plumbing company without being a plumber or that he would be making $250+K/year after he did buy that business. Either way you slice it, he wasn't going to be negatively affected by Obama's tax plan, period. "well who knows how much anymore since the number keeps changing?" You can repeat the same nonsense over & over again, but that still won't make it true. The number is what it has always been...$250K. "It's not murky that he wants to punish success." LOL...look, we both know what all your complaining is really about...you don't like the idea of progressive taxation, period. You never will, which is fine, but you are out of the mainstream in that regard...whether you acknowledge it or not. "My understanding of economics is pretty damn good" I haven't seen much of your "expertise" in that area in the now defunct FreedomTalks blog. "Well, he already said he wants to raise it either 33%, from 15% to 20%, but left open the possibility that it's just a first step to raising it 87%, from 15% to 28%." All you are talking about here is reverting the capital gains tax rates back to basically what they were in the 1990s. The "trickle-down" from the Bush tax cuts hasn't trickled down yet, and it never will. Businesses did just fine in the 1990s BTW. "The major 'Democratic' policy of the 1990s which people benefited from was welfare reform" Wrong again...you guys on the Right keep forgetting the vote in 1993 that passed Congress with absolutely ZERO GOP votes and eventually led to the federal budget being balanced by the end of the 1990s. "One of the key tenets of the Communist Manifesto is a strongly progressive tax code." Again, tell that to Adam Smith. "We currently have the most progressive tax code in our history" Nope, this isn't true either. "it appears he was a member of the socialist New Party in Chicago in the 1990s" Wrong again...wow, can you get anything right?? "Suggesting poor people will be Obama's real victims is not meant as a scare tactic, just as a likely outcome that might happen to be scary for low-income people." Yea...right...as if the lower-income people were the big losers under Clinton...LOL... History already has shown us the results of the economic policies of the two major Parties. The GOP's borrow-and-spend, trickle-down-voodoo-supply-side economics leads to the rich getting richer, the poor getting poorer, and the federal budget busting wide open. The Democratic policies of pay-as-you-go lead to reduced federal deficits, REAL fiscal responsibility, and wealth accumulation for all levels of society.