WASHINGTON -- President Barack Obama is expected to seek a new base tax rate for the wealthy to ensure that millionaires pay a higher tax.
But it's not that simple. In fact, it is diabolical.
Most wealthy people earn their money from capital gains - passive income from investments. By increasing the base tax rate for the wealthy to the same rate as earned income, Obama will effectively raise the tax on capital gains. And every economist, regardless of ideology, understands that spells disaster. Because the wealthy will simply not invest as much. They can't - Uncle Sam will have much of the profits.
And we all know what happens when people invest less - companies do not have as much working capital (that comes from the investors). Without capital, they simply cannot expand. They cannot develop new products. And they cannot hire.
One thing is now certain - Obama is not simply stupid when it comes to the economy. It is now quite clear that it has always been his intention to do his best to destroy free markets and capitalism. That is the only way to usher in socialism - and despite what his blind followers think, every economic move he has made since inauguration has been geared toward socialism. And this latest move proves it.
Of course, they call it "progressive". Which is just Political Speak for socialist.
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