But that’s not all, since the capital gains tax is paid on top of the 35 percent corporate tax. So under Obama, a 24 percent capital gains tax is really a 51 percent tax rate on capital.
As Mitt Romney found out, even today’s 15 percent cap-gains tax is really a 45 percent double tax on top of the corporate levy. But there’s a better way here: slash the corporate tax rate and leave the cap-gains rate alone until full-fledged tax reform can take place.
In other words, increase incentives to grow and invest. Make it pay more after tax to invest and take risks. That’s a growth prescription, the exact opposite of Obama’s redistributionism.
Why is it fair or equal to create a lower tide that pulls down all boats?
I interviewed Mitt Romney on CNBC this week, and it’s clear that he gets this. And as he aggressively argued in the Jacksonville, Fla., debate, he is proud of his success and doesn’t want to give it back to the tax man.
More important, Team Romney is cooking up a stronger tax reform plan. Romney intends to broaden the base by getting rid of deductions, exemptions and loopholes, and then bring down the rates. I asked him if the plan would be ready during the primary season. He said yes.
There is a growing consensus around the country for full-fledged reform of the personal and corporate tax codes. People yearn for simplicity, competitiveness and new incentives. Obama’s great mistake in the State of the Union was his low-ball vision of class warfare and redistribution when the country wants growth measures.
This November we’ll see a great debate between a big-government entitlement society that emphasizes fairness and a smaller-government growth society based on free-market capitalism. Pro-growth tax reform is essential to this debate.
Larry Kudlow is the host of CNBC’s “The Kudlow Report.”