The Democrats' capital gains tax idea sounds so benign, but like all new taxes it has two problems.
First, the money gets spent and it doesn’t solve the problem or an emergency redirects it.
And second, the solution is to raise or expand the tax.
Consider Connecticut, where politicians convinced the voters in 1991 to approve a small 4.5 percent income tax, promising it would solve budget problems for decades. Two years later, the money was gone because spending soared after the politicians had access to a new cash cow of income tax receipts.
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Five income tax hikes later - plus property tax increases, business tax increases and the extension of a 20 percent "temporary" surtax on corporate profits - still doesn’t solve the problem, and another $1.2 billion tax hike is on the way.
Insurance giants Aetna and Travelers, as well as General Electric - facing a 27 percent tax increase this year -are threatening to leave and get out of this abusive relationship. This is what we could see if the bill doesn’t make it impossible to redirect the money, lock the rate and require a two-thirds vote by voters to change any part of it.