January 20, 2015 1:14PM 

# Obama Capital Gains Tax Proposal 

By [Chris Edwards](https://www.cato.org/people/chris-edwards) 

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President Obama’s economic policies always seem to be a zero-sum proposition with winners and losers. Usually the losers are all Americans, who suffer from slower economic growth.

The president’s new tax proposals are a case in point. One damaging item is a proposal to raise the top federal capital gains tax rate from 24 percent to 28 percent. That would come on top of his previous increase from 15 percent.

Despite what the president and his political advisors may think, low capital gains tax rates are not some sort of unjustified loophole. We’ve had reduced rates virtually the entire time we have had an income tax, and for very good reasons. Low capital gains tax rates are crucially important for spurring entrepreneurship, investment, and growth.

Recognizing that, nearly every other high-income nation has a reduced capital gains tax rate. The average top long-term rate in the 34 Organization for Economic Cooperation and Development nations is just 18 percent, [according to Tax Foundation](http://taxfoundation.org/article/high-burden-state-and-federal-capital-gains-tax-rates#_ftnref6). By contrast, the U.S. rate (including state taxes) would jump to 32 percent under the Obama plan—far higher than the rate in most other nations.

For more, see [my op-ed in *Daily Caller* today](http://dailycaller.com/2015/01/20/thankfully-obamas-dumb-capital-gains-plan-is-going-nowhere/).

![Media Name: cap_gains_2.png](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/cap_gains_2.png?itok=f4ki8fHW) 

Wonk note: Data is from [Tax Foundation](http://taxfoundation.org/article/high-burden-state-and-federal-capital-gains-tax-rates) and [my Cato study](https://www.cato.org/publications/tax-budget-bulletin/advantages-low-capital-gains-tax-rates). Unlike TF, I did not include the effect of the limitation of itemized deductions, which slightly increases the effective rate.

##### Related Tags 

[Tax and Budget Policy](https://www.cato.org/tax-budget-policy) 

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