The Intersection

Obama gives half of a good answer

In last Wednesday's debate between U.S. Senators and challengers for the Democratic presidential nomination Barack Obama and Hillary Clinton, Moderator Charlie Gibson asked Obama about raising the capital gains tax rate, which Obama has proposed he would do if elected this fall.

The half-of-an-answer Obama gave addressed fairness and debt, two important issue I do not fault him for raising. But Obama missed an opportunity to question the assertions of Gibson, assertions Dean Baker, co-director of the Center for Economic and Policy Research called "rather dubious" Thursday in online commentary at the Web site of the American Prospect.

Gibson claimed in his line of questioning that cuts to the capital gains tax rate generate greater levels of revenue. Baker says the uptick in revenue is due to investor delays of stock sales when tax cuts are looming. Further, a January 2008 blog entry for Time magazine's Web site, by Justin Fox, shows the increase in revenue following the 1997 rate cut did not continue unabated or even level off but rather, without any change to the tax rate, sharply declined in later years to revenue levels below those collected before the 1997 cut from 28 percent to 20 percent. Also, revenue levels from 1995 to 1997 were already rising at about the same trajectory as they rose after the rate cut.

While it is unfortunate Obama could not speak to Gibon's distorted view of the "benefits" of capital gains tax cuts. He did address two important points - it is unfair for working men and women, who pay taxes on earned income, to shoulder the burden of our tax code so those who collect unearned income can enjoy less responsibility, and our debt, a point on which Obama voiced support for our government paying for programs now as it goes about funding them, rather than financing a debt future generations will have to pay off with interest.