This week, CFIF Director of Legal and Public Affairs Timothy Lee appeared live on CNBC’s “Street Signs” with Erin Burnett to explain why increasing taxes on capital gains is a bad idea.

President Barack Obama has proposed increasing the tax rate on capital gains to 20%, up from the current level of 15%, as a way to increase government revenues.

As Lee explained to viewers, however, raising capital gains tax rates would actually decrease government revenues, not increase them.  “Over the last half century, every time [capital gains] taxes have gone up, the incoming [government] revenues have gone down, and vice versa,” Lee said.

Lee further argued that an increase in capital gains taxes would hit lower-income and middle-class taxpayers hardest.  Disputing the often-used argument that capital gains taxes only affect the “rich,” Lee explained that “80% of households reporting capital gains in 2005 were earning under $100,000 a year, and half of them were earning under $50,000 a year.” 

Appearing with Mr. Lee was David Min with the Center for American Progress, a proponent of raising capital gains tax rates.

View the video below...