Thursday, March 5, 2015
Wall Street Journal, Is It Fair to Tax Capital Gains at Lower Rates Than Earned Income?:
Capital gains—and how big a bite the government should take out of them—have become a major point of contention in the past couple of months.
In January, President Obama proposed tax changes designed to raise some $320 billion over 10 years, largely through higher levies on high-income Americans. The revenue would be used to cover $235 billion in tax breaks, mostly for moderate-income workers, along with other initiatives.
Among the changes he proposed: boosting the capital-gains rate to 28% for the top 1% of taxpayers, up from the current 23.8%, as well as a new capital-gains tax on many inheritances.
The GOP fired back that taxing investment income would harm economic growth by discouraging business investment and thereby hurt workers’ incomes.
All of which points to a broader question that divides experts: Are capital gains so different from earned income that they should be taxed at a different rate?
Below, two experts tackle that question.