The War on Entrepreneurship, Our Nest Eggs and Job Creation Continues…

Upon taking office there was little if any doubt that President Obama would allow capital gains tax rates to expire from the current 15% and rise to 20%. Last summer, Democratic leaders in congress kicked around additional tax hikes on capital gains to finance health care reform measures.

Today the latest battle in the war on entrepreneurship continues as the president outlines his new health care reform proposal. Among the multiple tax increases wrapped into the proposal is yet another capital gains rate tax increase as reported in Bloomberg News:

"President Barack Obama proposed the first Medicare tax on unearned income including capital gains, while raising fees on drugmakers and scaling back a levy on high-end benefits as part of a new plan to overhaul the nation’s health-care system….

"The proposed tax would also apply to capital gains, an administration official confirmed. That would push the rate to 22.9 percent in 2011, up from 15 percent currently and 20 percent scheduled to take effect next year. Obama also embraced the Senate proposal for an increase in the Medicare payroll tax on the highest earners."

Can the U.S. really afford to fall further behind other major economies that enjoy far lower capital gains tax rates? More than half of the countries surveyed in a study by the ACCF have individual capital gains tax rates lower than that of the U.S. An even higher capital gains tax rate will put us at more of a competitive disadvantage.