Should Congress Raise Investment Taxes Again? No.

Will congressional Republicans cave on investment tax rates again like they did in the fiscal cliff deal?  That’s the million dollar question.  And the debate is quietly taking place right now in Congress.  But as Dr. Seuss once said: “Sometimes the questions are complicated and the answers are simple.”  So should Congress raise taxes again?  No.

Raising investment taxes (again) as part of comprehensive tax reform is the wrong approach.  Not only does it result in double taxation, but it will also stymie growth and job creation, which won’t do anything to help low and middle income Americans. 

Nonetheless, proponents of higher investment taxes state:

The special tax treatment of investment income is one of the biggest tax expenditures on the books. The congressional Joint Committee on Taxation estimates it will cost the government $616.2 billion from 2013 to 2017. 

But these numbers don’t occur in a vacuum.  What fans of higher taxes fail to consider is the overall effect on the economy and on jobs.  The Heritage Foundation’s senior tax policy analyst Curtis Dubay explains:

There will be plenty of revenue coming into Washington over the next 10 years. Additional tax hikes would not address the problem of excessive spending but instead give more money to Congress and President Obama to spend.  

He adds:

These tax increases are slowing economic growth and job creation because they fall heavily on small businesses and investors. Americans at all income levels are feeling their negative impact.

Similarly, after the fiscal cliff deal he stated:

Less investment will reduce capital formation, which means that businesses will create fewer jobs and pay their workers less.

This debate is a perfect prism through which to see how conservative policies – not liberal policies – help all Americans, especially low and middle income families.  It may feel good for the Left to target folks who make investments, come up with innovations, and start businesses – making money in the process.  But they’re cutting off their nose to spite their face; they’re harming everyone in the process.

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Additional tax hikes will fail to address Congress's spending problem. In fact, it will just make it worse.

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Higher taxes on investments will harm low and middle income Americans.

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