Friday, September 16, 2011

An op-ed by Newt on the need to eliminate the capital gains tax

Full op-ed here.

Encouraging work, economic growth, entrepreneurial innovation and the revitalization of our manufacturing base are the answers to the unemployment and poverty crises confronting America.

This is why I have proposed a tax policy that maximizes private capital investment to create jobs. It starts with eliminating the capital gains tax and the death tax, reducing the corporate tax to 12.5%, and 100% expensing of all new capital equipment purchases.


Many don't realize that the capital gains tax is not the only tax on capital income. First, the business in which one is investing must pay a 35% corporate tax on all income. Second, any dividends distributed to shareholders are taxed as individual income. Third, when the investor sells his share, he has to pay any capital gains taxes. Finally, if there is anything the individual has left at death, then this capital income is taxed again — a whopping fourth time — by the death tax.

All these taxes discourage investment in the United States and encourage it in foreign markets. This directly affects every American through lost jobs, lower wages and a weaker economy as the capital investment that creates jobs and bids up wages goes to another country, leaving American workers behind.
Newt also recounts how investment skyrocketed when he led the charge to cut the capital gains tax in 1997.

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