I will not be active commenting on political situations in this blog, but when they cross into the fiscal or environmental landscape and I feel strongly about them, I am going to make brief comments.
An article on Bloomberg explains a current measure in the House where Representatives, mainly Democrats, are arguing to raise the cost of Medicare taxes on rich people, more specifically on long-term capital gains. The measure is targeting hedge fund and private equity managers that are selling appreciated assets, arguing that those assets should be treated as ordinary income.
There are multiple issues I have with this.
I do not think the idea of changing the taxes on capital gains is a good idea, and will probably backfire on them if they take this approach. Everyone benefits from paying 15% taxes on capital gains, not just the rich. It encourages longer term investment and changes to it would create a lot of volatility in an already bubbling U.S. equity market.
I do not think that targeting rich people to pay extra for Medicare is a good idea. I view Medicare as a form of Social Security. It is something you pay for throughout your lifetime to cover yourself when you retire. While what we pay, actually goes to those recieving Medicare and Social Security this year, in theory it should be saved to pay for ourselves. Having the rich pay extra for a service that in reality they will actually need the least goes against basic logic.
Lastly, just in general, taxing the rich more to take care of problems created by problematic legislation that is detrimental to the poor will not help anything in the long run. It continues the poor legislation with a hack to fix a bigger problem.
