ATR President Grover Norquist today endorsed H.R. 1549, introduced by Congressman Michael Grimm (R-N.Y.). It repeals the 3.8 percent "surtax" on savings and investment in the jobs-killing Obamacare law.
On behalf of Americans for Tax Reform, I am pleased to support H.R. 1549, a measure which would repeal the investment “surtax” from the jobs-killing Obamacare law.
The harmful Obamacare law contains 21 new or higher taxes on American families and employers. One of these tax increases is a new 3.8% “surtax” on investment income for households making more than $250,000 per year ($200,000 for single taxpayers).
That means that the tax rate on investment will be 3.8 percentage points higher than the law calls for. Starting in 2013, this means that the top capital gains rate will rise from 15 percent to 23.8 percent. The top dividends rate will rise from 15 percent today to an astonishing 43.4 percent. All other forms of investment—interest, rental income, investment in a small business, and more—will also face a new top rate of 43.4 percent.
When state income taxes are factored in, it’s entirely possible that these taxpayers will see a top rate of 50 percent or more on most investment income besides capital gains. Even the capital gains rate could face a federal-state rate exceeding 30 percent.
In an age of globally mobile-capital, high tax rates are a signal that America is closed for business and that we don’t want to create a culture of savings and investment. The proper tax rate on capital gains and dividends is actually 0 percent, since it represents a second tax bite on after-tax corporate profits (which already face the highest rate in the developed world). Other investment should never be subjected to marginal tax rates that approach or exceed half the return on an investment. Money can and will go elsewhere.
ATR supports full repeal of the jobs-killing Obamacare law. We also support selective repeal of parts of the law, which H.R. 1549 does.