The Absurd Report

Fiscal Policy: In entertaining a near-doubling of the capital gains tax, Barack Obama shows that, unlike JFK, to whom he so often is compared, he under-appreciates the key link between investment and prosperity.

Interviewed by CNBC on Thursday, the Democratic presidential front-runner set his sights on boosting the top capital-gains tax rate from the current 15% set by President Bush to “20% or 25%.”

“When I talk to people like Warren Buffett or others,” he told Maria Bartiromo, “they say, ‘Look, if it’s within that range, then it’s not going to distort . . . economic decision-making.’”

Obama did add that he would consider keeping the rate at 15% for middle-class taxpayers, contending incorrectly that the rich have benefited disproportionately from the Bush tax cuts.

“For us to roll back some of those tax cuts and to put this economy on a more stable fiscal footing, and to make investments in the American people so that they can afford a decent life . . . is actually good long term for our economy and also good for investors and Wall Street,” he said.

Unfortunately, Obama’s thinking has everything to do with pleasing the Democratic Party’s anti-business base and nothing to do with economic reality.

Along with Ronald Reagan and George W. Bush, Jack Kennedy — one of Obama’s heroes — ranks with the great tax-cutting presidents of American history. His 1963 proposal called for both a huge drop in the top individual income-tax rate and a significant reduction in the cap-gains rate — which then stood at the very same 25% level Obama now talks of increasing it to.

JFK knew a cap-gains rate even as high as 25% would lock up wealth that should flow to more productive investments.