I'm Pete du Pont with the National Center for Policy Analysis. I'm glad we have President Bush's modest tax cut and the phase out of the death tax, but is there a less fair, less productive tax than the capital gains tax? We should do away with it for both philosophical and practical reasons.
Higher capital gains rates reduce the capital stock and lower growth and productivity. Capital gains taxes encourage a lock-in effect that discourages investors from selling their assets; it leaves too much capital in older investments at the expense of newer opportunities.
Then there's the fairness problem. Capital gains aren't income – as the supreme court has held for years. Taxing the increase in the value of capital is a double tax. Capital gains are already taxed more than once through the corporate and personal income tax.
Finally, taxpayers aren't allowed to deduct losses when they sell their stocks. As a result, they can owe taxes even when losses far outweigh gains.
Unfair, economically crippling. Anything else you need to know? Let's get rid of the capital gains tax now.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, throwing precaution to the wind.