Competitive plutocracy
by David Atkins
The New York Times yesterday actually had a debate forum asking whether we should just eliminate the capital gains tax altogether. Since apparently wages are too high, the stock market isn’t soaring enough, corporate profits aren’t at high enough records yet, and Wall Street types don’t make nearly enough money.
The fact that this question was even asked in a major newspaper is a dark, dark sign.
But there is an answer from a Cato Institute shill that is simultaneously hilariously wrong and food for thought:
Taxing capital income causes capital to seek countries with lower rates. Jobs are lost when that capital builds businesses elsewhere.
In the short term this is ludicrous. Capital income seeks profitable investment regardless of the tax rate. Profitable investment can be found either in extraction economies where the cost of human dignity and life is very cheap, or in economies with a strong middle class where demand is strong. Because of that, the capital gains rate should probably be doubled to 30% if that money can be used to strengthen the middle class.
Over the long term, however, it is almost certainly true that nations will play the same destructive games with their capital gains rates that states like Delaware have been allowed to play with corporate tax rates, and that cities continue to play with each other to encourage the next WalMart SuperCenter to move in and plague their citizens.
At some point the world is going to have to step up and say “no, you can’t do that.” And as the shrieking about national sovereignty overwhelms the obvious progressive rationale for doing so, all people the world over will lose real sovereignty while the plutocratic elite play nations, states and cities against each other for their own corrupt and venal ends.
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