The capital gains tax is yet a third layer of taxation on capital income by levying a 15% tax on any gain in the value of capital over time. Finally, the death tax (the popular name for the estate tax) imposes a fourth tax on capital income, taking roughly half of whatever an investor is able to retain and leave to his children — which would leave the children with just 17 cents out of the original dollar the investor earned during his lifetime.
As Ronald Reagan put it:
"Any system that penalizes success and accomplishment is wrong. Any system that discourages work, discourages productivity, discourages economic progress, is wrong.
"If, on the other hand, you reduce tax rates and allow people to spend or save more of what they earn, they’ll be more industrious; they’ll have more incentive to work hard, and money they earn will add fuel to the great economic machine that energizes our national progress. The result: more prosperity for all — and more revenue for government.
“A few economists call this principle supply-side economics. I just call it common sense.”
[“An American Life” by Ronald Reagan, p. 232]
These are the reasons we believe Reagan would today support eliminating the capital gains tax and the death tax, and allow a deduction for corporate dividends so they are not taxed by the corporate income tax. This would be part of Reagan’s “common sense” prescription for America’s ailing economy.
See The Reagan Resolve at: http://theccwr.org/ReaganResolve.html.
For more information, see The Carleson Center for Welfare Reform.