In my last column, I discussed Obama's plan to raise the 15 percent capital-gains tax rate, possibly to 25 percent, noting how Charlie Gibson challenged the senator by pointing out that revenues always fall when the tax is raised.
I queried a number of top economists around the country about the freshman senator's tax plan, and here's what Glenn Hubbard, the former chairman of the White House Council of Economic Advisers, and now the dean of Columbia University's Graduate School of Business, had to say about it:
"Raising capital (gains) taxes is bad at any time -- and particularly in a weak economy. The only argument for such a tax increase -- since that argument can be neither economic efficiency nor efficient revenue collection -- would be a policy of (income) redistribution."
And that, of course, is what Obama has in mind. He would pay for his middle-class tax cuts in part by taxing the 100-million-member investor class, 50 percent of whom are the middle class. It is income redistribution by the government, pure and simple.
"They claim they do not want to raise taxes on anyone up to $250,000, but more and more ordinary Americans own stocks through mutual funds, IRAs and 401(k) plans at work. A higher capital-gains tax on stock reduces the value of the stock," said Grover Norquist, president of Americans for Tax Reform.
While Obama promises in one breath that he would not tax anyone below $250,000, with the next breath he says he would raise the $97,000 cap on the Social Security payroll tax to extract money from "millionaires and billionaires" who don't have to pay beyond that rate.
"But that's a tax ... on people under $250,000," Gibson reminded the Harvard graduate. "There's a heck of a lot of people between $97,000 and $250,000." Obama, obviously, hadn't thought of that.
If that's not contradictory enough, former Clinton White House adviser Gene Sperling, Hillary Clinton's chief economic adviser, said that if the United States were still in a recession next year, she would stick to her tax-hike plan, while proposing a temporary economic stimulus.
"Her view would be to add another stimulus through more progressive temporary tax cuts that would have a higher bang for the buck, but she will still revert back to the old top tax rate," he told me.
That begs the question, in macroeconomic terms: Wouldn't each cancel out the other?
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