Government doesn’t create any income or wealth. The main role of government is to make sure there is a positive environment that permits the creative energies of those in the private sector to flourish. When the private sector prospers there are gains throughout the economy. This is precisely what happened when Congress lowered key tax rates in 2003. In the wake of that move the US economy has far outpaced every developed economy in the world.
The creation of additional income has made it easier to deal with challenges such as soaring energy prices, higher interest rates, and conflict in the Middle East. When the economy performs well, the benefits reach all sectors, including government. Growth in incomes, jobs, and profits have soared to such an extent that government revenues are now rising at double-digit rates.
Extending the lower capital gains rate through the end of the decade helps promote a healthier environment for the creation of wealth–one that will not only help to increase incomes, jobs, and profits throughout the economy, but also produce more revenues for government.
Dr. Robert Genetski
Dr. Robert Genetski is a policy advisor to The Heartland Institute. He earned his Ph.D. in economics from New York University and has taught economics at New York University and at the University of Chicago’s Graduate School of Business.