Higher capital gains tax will not stop investors
As the debate on tax rates is argued in Congress and the media, I am puzzled by one statement. If the tax rate on capital gains and dividends is allowed to rise, this will have a serious effect on people’s desire to invest. That seems to be a swift and easy response, but does not really examine how the wealthy will probably react. Ask what they will do with that money.
Would they put that money into a bank account at perhaps 1 percent interest? And if they did, wouldn’t the bank then invest that in home mortgages and consumer and car loans?
Or would the wealthy then go out and spend lavishly with the funds that they refuse to invest? That consumer spending might then trickle through the economy and stimulate spending and growth for all.
Or would they stuff the cold, hard cash under the mattress or bury it in the back yard? These people did not get wealthy by being stupid. They know that the best return on their dollars will still be investing in the stock market.
Yes, they will have slightly less to invest if the capital gains rate increases as proposed, from 15 percent to 20 percent. But that increase is not going to cause the “job creators” to flee the market.