Does anyone seriously believe that doubling taxes will fix the spending problem, or reduce the national debt?

[i]Photo above - The White House proposes resurrecting Carter era tax rates. Can stagflation be restored too?[/i]

Imaginary conversation:

Biden re-election team: “Mr President, we suggest that you announce you're going to double the capital gains tax. Fron 23% to 45%. And make it apply to dividends too. Voters will love you for it."

President Biden: “Fine by me. I don't believe in stocks or mutual funds. I've always said those are unsafe. People should buy US Treasury Bills instead.”

My wording might be imaginary, but a variation of that conversation CERTAINLY took place over the holiday weekend. And now all the democrats who understand money are freaking out. Because not only will this NOT fix our budget problems (people will just top selling stocks, like they've stopped selling homes), but because a huge tax hike might ruin their OWN re-election chances in this year.

If you live in New York, California, Miami (Mr. Bezos, I'm looking at you) or any place where people with real money can afford to live, you're probably already calling your congresspersons and senators. I don't have repeat THOSE imaginary conversations, do I?

Stupid proposals like this happen because the assumption behind policy changes is that “everybody will behave just like they did before.” So in 2022 the federal government collected $250 billion in capital gains taxes. Someone is assuming that if the tax rate doubles (at all tiers, not just the max), the new haul will be $500 billion. Stop laughing, that's really how the politicians who created our $34 trillion national debt think.

If you don't any stocks, don't have a 401K, or an individual retirement account, you might be marching around cheering. “Taxes double? So what! Good riddance. Screw dem greedy folks who've been saving10% of their paychecks every month. They never should've done that. This'll teach 'em. Now where's my guaranteed basic income, and student loan forgiveness?” These are votes Biden can surely count on, no?

Biden is facing a tough re-election. I get it. He's losing in the swing states to a man who's about to become a convicted felon. Foreign students are rampaging on US campuses because the prez isn't antisemitic enough to suit them. Biden can't cut spending, can't force Powell to reduce interest rates, can't close any of America's 800+ global military bases. The most powerful man on earth might actually be virtually powerless.

So he's doubling down, by doubling taxes.

I'm just sayin' . . .

~How Biden's Capital Gains Tax hike will crush the economy (msn.com)~

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SunshineGirl · 36-40, F

Did he ever actually present the proposed capital gains tax rise as a way to reduce the national debt? My understanding is that it is prudent and proportionate measure to the spending commitments of his (comparatively) radical and interventionist economic policies. Yes, the proposal is not likely to be unpopular with the masses - taxing unearned the unearned income of capital owners is generally a more rational idea than taxing the earned income of those with few or no assets - but is it not just remotely possible that an experienced and principled politician might be acting out of something other than naked self interest?

Nobody believes that "everybody will behave as they did before". That is why we elect politicians, to weigh up difficult choices and make compromises. Tax increases may influence the economic behaviour of some capital owners and if the consequences are deemed to be negative overall they can be anended or reversed in the future. But one thing is for certain, they will not "crush" an economy as large and resilient as that of the USA. If we listened to this hyperbolic c**p every time anything faintly challenging to vested economic interests and the status quo is proposed, we would never get anywhere at all.

Just sayin' 😐

NatureGuy77 · 56-60, M

@SunshineGirl They start taxing unearned income and that giant whoosh sound are investors leaving to US capital markets. Capital is mobile and it will leave if they enact that and their economic advisors know it. It will increase interest markedly as capital markets will shrink. Houses, business and capital equipment (cars) all dramatically more expensive.

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NatureGuy77 · 56-60, M

@SunshineGirl Capital is Mobil and it does and will go to wear the highest returns are. You bring back 70-90% marginal rates and tax unearned income, they’ll make Jimmy Carter look like Milton Friedman

SunshineGirl · 36-40, F

@NatureGuy77 Buildings, however, are generally not mobile . . that is why capital gains and inheritance taxes are more efficient than taxing earnings and profits.

NatureGuy77 · 56-60, M

@SunshineGirl People can and will move their estate money before they pass to avoid those estate taxes.

SusanInFlorida · 31-35, F

@SunshineGirl "nobody believes everyone will behave as they did before".

you and I know this won't happen, but virtually every tax or spending proposal assumes behavior remains the same.

taxes inevitably take money out of consumer paychecks

spending inevitably causes people to flock to whatever is being subsidized: housing; Tesla cars; Amtrak; FDIC insured certificates of deposit at banks . . .

RedBaron · M

@NatureGuy77

Capital is Mobil

No, the oil company is MOBIL and capital is MOBILE, like the city in Alabama.