Tags: Moore | Obama | tax | wages

Heritage Foundation's Moore: Obama's Tax Ideas Would Suppress Wages

By    |   Monday, 02 February 2015 01:59 PM

President Obama might seek to sock the wealthy with tax increases, but he'd actually hurt the working man, says Stephen Moore, chief economist at the Heritage Foundation.

"The worst Obama ideas on taxes are directed at investors, entrepreneurs and risk-takers," he writes in a commentary for The Washington Times. "These Obama investment tax hikes wouldn't just harm wealthy investors, but American workers."

If Obama's proposals on increasing capital gains, dividend and estate taxes pass Congress, "the tax on investment income will be nearly twice as high when he leaves office as when he entered office," Moore says.

To be sure, the president's program has virtually no chance of making it through a Republican Congress.

But why would the higher taxes hurt workers? "When you raise the tax on investment, you get less investment," Moore explains.

"When businesses invest less, fewer workers are hired, and existing workers have less machinery, technology, computers and equipment to work with. This means they can't be as productive on the job, and their wages stagnate."

Average hourly wages rose just 1.7 percent in the 12 months through December, the weakest gain since October 2012.

"The point here is fairly simple: When businesses are healthy, productive and expanding, wages rise."
But that probably won't stop the Federal Reserve from raising interest rates, says Peter Boockvar, chief market analyst at The Lindsey Group.

"Yes, wage growth continues to be lackluster, but the Fed won't likely wait to see the whites of its eyes," he wrote in a commentary obtained by CNBC.

"The continued drop in the unemployment rate is further signs of labor market tightening, and another drop in the participation rate is clear evidence that the slack the doves are relying on is just not there." The unemployment rate slid to a six-year low of 5.6 percent in December.

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President Obama might seek to sock the wealthy with tax increases, but he'd actually hurt the working man, says Stephen Moore, chief economist at the Heritage Foundation.
Moore, Obama, tax, wages
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2015-59-02
Monday, 02 February 2015 01:59 PM
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