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Blog

    Obama's Capital Punishment

    10/30/2008

    In a speech in Sarasota, Florida on Thursday, Barack Obama said he "will eliminate capital gains taxes for small businesses and start-up companies that are the engine of job creation in this country."

    Sit back and think about that for a minute, especially in combination with what he said to Joe the Plumber.

    What does Obama think the goal of someone who starts a small business is? To stay small?

    How much clearer could Obama be that he does indeed want to punish success?

    As I've said before, an Obama victory will show two things: First, that Americans have almost no understanding of even basic economics, and second that the GOP has utterly destroyed their brand...both of which are undeniably true.

    How about a little thought experiment? Let's say Obama's definition of "small business" is one with profits of $250,000 or less, or one with some amount of revenue or less or some number of employees or less.

    Given Obama's rhetoric, it's likely that the jump in capital gains tax rate (or any other tax which Obama will use to punish success) will be large at that threshold value.

    So the business owner has great incentive to get the business to that level, but no higher, keeping him from creating more jobs, generating both economic activity and tax income for the government.

    Or imagine that the business owner wants to sell the business and retire in a few years. But if he grows the business any more, it will pass the Obama punishment threshold and he'll end up having basically built the business for nothing because the growth will have been pilfered by the Democrats. Therefore, he sells the business three years early, causing him to lose three years of productivity, three years of income, and basically three years of doing what he wanted to do with his life.

    The problem with "progressive" economics is that it leads to outcomes directly opposite to those which progressives claim to care about, namely better financial situations for people of modest incomes.

    Punishing success will simply cause those people to be unable to find work, whereas the rich or nearly-rich would-be-entrepreneur can just keep his cash in the bank...or in municipal bonds so he doesn't pay any income tax...and be worse off than he would have been but not nearly as much worse off as the person who really needed that job.

    There is a reason that data show capital gains revenues to the government to rise when the capital gains tax rate is cut. But when pressed about that in an interview a few months ago, Obama's answer is that he'd still raise the capital gains rate "in the interest of fairness".

    That was probably the first major publicly-recognizable clue that Barack Obama is a committed socialist: He wants to attack the rich even if it means the government gets less money. It's shocking that more hasn't been made of it, but between the disgusting pro-Obama bias of the media and the lack of curiosity on economic issues by Americans except during the worst possible times, the importance of Obama's admission was missed by most.

    I guarantee you that even low-income people won't miss the point when they can't find a job because the Democrats want to punish the rich.

    For small business, Obama is indeed "capital punishment".

    As they say, people get the government they deserve. It's too bad the rest of us are going to have to suffer through the government that California, Massachusetts, and Boulder deserve.