A Conservative Suggests We Raise the Capital Gains Tax

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


James Pethokoukis asks:

Should we eliminate corporate income taxes and raise capital gains taxes?

Hmmm. I’m guessing he thinks the answer is no. But wait! Maybe not:

I have already suggested that Mitt Romney propose axing the corporate tax. Combining that with an increase in the capital gains tax—a tax hike on Romney himself—might be a doable compromise….How about this: A top tax of 28%—back to where it was in 1986 under bipartisan tax reform and close to Obama’s Buffett Rule—on all income along with an elimination of corporate income taxes? Any takers? Any suggested modifications?

Although I’m not ready to jump on this specific bandwagon quite yet, I’d be willing to talk. There are a bunch of practical problems with eliminating the corporate income tax, but it’s possible they could be overcome. As for the 28% top rate — well, let’s just take that as an opening bid. I doubt you could lower it that much. In fact, I’m not sure you could lower it at all, since higher taxes on investment income might not make up for the loss of corporate income tax revenue. What’s more, capital gains and dividend taxes are going to be raised automatically at the end of the year if the Bush tax cuts aren’t extended, so offering to raise them now isn’t really much of a concession.

Despite all that, I continue to think this has possibilities. The corporate income tax isn’t just insanely complicated, it’s also impossible to prevent it from becoming an endless honeypot of corporate subsidies and payoffs. Getting rid of it entirely is probably the only way to put an end to this.

Politically, the biggest problem with this proposal is that once the corporate income tax is gone, it would be gone forever. It’s just too hard to bring it back to life. Conversely, reducing the capital gains tax is simplicity itself. So a likely outcome of all this is that the corporate income tax would go away, and ten years from now we’d be back to the same old low rates on capital gains and dividends because — oh, you know the drill. High investment taxes are hurting capital formation, punishing the job creators, stifling investment, crushing the economy, blah blah blah.

Still, it’s worth a conversation even if it is pie in the sky. I’d be pretty interested in seeing some neutral revenue and distributional analysis of the whole thing.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate