by Pamela Villarreal
Taxing the nonwage income of the wealthy is politically popular because it is assumed few people will be affected. President Obama’s 2016 budget proposes an increase in the capital gains tax to 28 percent for couples earning $500,000 or more.
This is estimated to increase revenue about $208 billion over 10 years. In his State of the Union address, Obama noted the Reagan administration established the same rate, as if to minimize the effects of the proposal. But the comparison is not apt; President Reagan lowered marginal tax rates during his tenure, and there was no Medicare tax on unearned income, as there is now. What would be the effect if the capital gains tax increased from its current 20 percent to 28 percent?