I'm not going to tell people what morality is and what it isn't. It really bugs me when people try to classify other people’s behavior as being moral or not. But what bugs me even more is when a group that has taken the moral high ground on specific issues is silent about other really big moral issues. I’m talking about the morality of our tax code.
There are a lot of different moral codes out there, and many of them look down on gambling and sloth. It’s not universal, but a lot of Americans consider gambling and the “ill gotten gains” it creates as being less favorable than money earned through hard work and toil. Case in point, can you think of any real successful politicians who say that their profession is Roulette?
Now think about sloth, one of the seven deadly sins. Probably not as big of a deal these days as it once was, but the idea of sitting around, doing nothing, and leaching off the hard work of others is still considered morally “grey”. Applying our politician test, imagine a politician that proudly announced that he simply lives off the hard work of his parents in their basement. Would he have any chance of getting elected?
Next, think about our tax code. If you go to work every day, punch a clock and DO SOMETHING for your job, chances are your income will be taxed at a progressive rate. Now, setting aside the moral discussion of progressive tax rates (the topic of another diary), let’s think about someone else that makes their money off of capital gains. They’ve taken some of their money and invested it in an asset like stocks, bonds or real estate. They took a big risk with that money, but it paid off and now their sitting on a pile of money. Now, unlike you, that person gets taxed at the low 15% capital gains rate. Sound moral?
If we apply our moral code against gambling and sloth, capital gains are certainly in the same category. Without much effort, they’ve let their asset appreciate and reaped its rewards. Sure, there was some effort involved in picking the right stock, knowing the best time to buy and sell. Or if their capital asset was some property, they may have even worked hard to find, buy and maintain it. And sure, they took a big risk when they gambled with their own money. Now that they’ve succeeded, they’re about to be rewarded by a lower tax rate than if they would have punched a clock and worked each day for that money.
And what’s the punchline? The political party that seems to be the most obsessed with “moral” issues doesn’t seem to see farther than the bedroom. Republicans are fixated on contraception, abortion and same sex marriage. But what’s their stance on gambling and sloth? Reward the job creators with tax breaks!
Now before the flames start, let me be clear that I’m not saying making money off of capital gains is illegal or immoral. Investment in our economy is crucial to its growth and function. And although gambling is illegal in many places in the US, if we were to categorize any time we took a big risk as being immoral, we couldn’t even cross the street. But what I’m saying is imagine a world where capital gains are taxed with a “sin tax” like cigarettes and alcohol instead of being rewarded. Quite a different world...