By Teresa Welsh |
All Americans have the opportunity to pay the same low effective tax rate as Governor Romney. They can save more money, make prudent and smart investment decisions, and then reap the benefits of compound interest over time. That's the principle of economic freedom that allows people to become wealthy in America. Sure, it's not easy to do, but it's not impossible or out of reach for any American.
Plus, tax rates on investments should be low in order to encourage investing. This builds capital that will create the factories and innovations that lead to prosperity and a higher standard of living for everyone. Conversely, higher tax rates will reduce that incentive. Even worse, it will engorge a federal government that has already proven to be reckless with our tax dollars. Why reward that kind of behavior?
If we really wanted to build up the accumulation of wealth in this country so that everyone can amass a fortune like Romney did, we should send the capital gains tax rate straight down to zero. That would give everyone a huge incentive to start up a new business, invest in new ideas, and create jobs that will spur growth.
We should have contempt for those in society who use their power or influence to get special breaks at the expense of everyone else, but that's not what low tax rates on so-called "unearned" income do. We shouldn't make the mistake of punishing all rich people, and those who aspire to be rich, simply by raising taxes on saving and investment. That benefits no one, and hurts everyone in the end.
If we want more tax-paying millionaires like Mitt Romney, we should support the tax policies that encourage that outcome.
About Andrew Roth Vice President of Government Affairs at Club for Growth
Daniel Hanson Economics Researcher at the American Enterprise Institute
Vishnu Sridharan Program Associate with the Global Assets Project at the New America Foundation