Hiking capital gains tax will discourage growth
The recent letter, “Fixing an uneven tax code should be a top priority,” is mistaken in its view that capital gains should be taxed at the same rate as salaries and wages.
Because capital gains are from investments, they provide money to companies and businesses to create jobs. This is good for the economy and must be encouraged for economic growth. A higher tax on capital gains discourages growth in the private sector. This tax is lower than taxes on salaries to encourage investment.
Although the difference between capital gains tax and income taxes may seem unfair, it is not. The money for investments comes from income already earned by a person. This has been taxed by the government at that person’s tax rate. Instead of spending the money immediately, this person decides it would be fiscally smart to invest money. If the investor made an intelligent decision, he will earn money and will be taxed.
The lower capital gains tax rewards people for preparing for the future. In a country where many people are not saving enough, let’s encourage more preparation for the future.