Rattner: Raise Capital Gains and Dividend Rates to Help Shrink Deficits

November 26, 2012 at 1:15 pm

In a must-read New York Times op-ed, long-time financier and former Obama Administration official Steven Rattner calls for raising today’s low capital gains and dividend tax rates to help reduce the deficit, observing:

During my 30 years on Wall Street, taxes on “unearned income” have bounced up and down with regularity, and I’ve never detected any change in the appetite for hard work and accumulating wealth on the part of myself or any of my fellow capitalists.

This echoes the experience of billionaire investor Warren Buffet, who wrote in a New York Times op-ed last year:

I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain.  People invest to make money, and potential taxes have never scared them off.

As this chart — from our chart book on 10 things you need to know about the capital gains tax — shows, the capital gains rate is the lowest since the Great Depression.

Moreover, the economic evidence is consistent with Rattner’s experience:   taxing capital gains more lightly than earned income (wages and salaries) doesn’t boost investment, as our recent report explains.

Print Friendly

More About Chye-Ching Huang

Chye-Ching Huang

Chye-Ching Huang is a tax policy analyst with the Center’s Federal Fiscal Policy Team, where she focuses on the fiscal and economic effects of federal tax policy. You can follow her on Twitter @dashching.

Full bio | Blog Archive | Research archive at CBPP.org

Your Comment

Comment Policy:

Thank you for joining the conversation about important policy issues. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the CBPP and do not constitute official endorsement by CBPP. Please note that comments will be approved during the Center's business hours. If you have questions, please contact communications@cbpp.org.

7 − = six

 characters available