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Barak Obama on the capital gains tax

Having just recently finished doing my taxes, I found the following exchange in the last democratic debate interesting:

MR. GIBSON: And in each instance, when the  [capital gains tax] rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

SENATOR OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.

 I have a couple of problems with Obama's response. First, he does not try to refute Gibson's assertion that lower capital gains rates result in more revenue. He simply points out that hedge fund managers made tons of money last year and that that isn't fair. I thought the point of taxes was to raise money, not to keep people from having too much money. I don't know about others, but I am more interested in building my own fortune than in seeing someone else's diminished.

The second problem is that the way Obama frames his answer (contrasting hedge fund managers with their secretaries) reinforces the myth that only gazillionaires pay capital gains taxes. That's patently ridiculous. I am not stinking rich and I pay capital gains taxes. I'd be willing to bet that some of the hedge fund managers secretaries pay capital gains taxes. And certainly there are a lot of people making less than $250,000 a year that pay them. So in spite of Obama's promises, some people in that income range will have their taxes raised.