Don't you love it when a liberal concedes your point, then claims that your criticism merely proves what he was saying to begin with? O-kay ...
An example of this occurred on Thom Hartmann's radio show last week when he responded to a NewsBusters post that questioned whether he benefited from President Ronald Reagan cutting the capital gains tax in 1981. (Audio after the jump)
I remember when Reagan dropped the capital gains tax by like 15 or 20 percent, something like that, in '86, Louise (Hartmann's wife) and I sold a business because the capital gains tax had changed, or was about to go up, Reagan was actually going to raise it back up again and it was going to go up and so we sold the business in the year we did rather than the year after when we really wanted to sell it because, you know, it would have saved us a few tens of thousands of dollars.
As I pointed out on May 21, Reagan initially dropped the capital gains tax from 28 to 20 percent as part of his sweeping tax plan in 1981. Five years later, Reagan raised it back to 28 percent in tax reform legislation, with the highest tax on ordinary income also at this percentage.
But if Reagan hadn't dropped the capital gains tax in 1981, I wrote, the Hartmanns would not have save "tens of thousands of dollars" by selling when they did, before the tax reverted to its previous rate -- which struck me as more than a little amusing considering that Hartmann loathes Reagan as anyone who listens to his show longer than a few minutes quickly learns.
Hartmann responded to my post via his radio show and provided some meat to the bones of his earlier remarks. The business in question was a travel agency created by the Hartmanns in 1983, after they had started a school for special needs and abused children in New Hampshire, the Hunter School, in 1978.
Sprayberry Travel did so well, Hartmann said, that sales reached $6 million annually by 1986 and he was hired to instruct other travel agents on how to emulate the business's success. This was when Hartmann and his wife decided they wanted to sell the agency within a few years. (Audio)
"And so our CPA said, if you're going to sell this business, you should sell it now and get the old capital gains rate, the 20 percent rate, rather than sell it later and pay 28 percent," Hartmann said. "And that would have meant, you know, a fair amount of money, as I said on the air, tens of thousands of dollars for Louise and I. We weren't talking about gazillions, we weren't the Koch brothers or anything like that, but it was still to us a lot of money."
"And somehow Jack Coleman thinks that, well, the headline is, 'Did Reagan-Hater Thom Hartmann benefit from Reagan tax cut?' Arguably yes, because I was a business owner. But that was my whole point. The class of business owners benefited from the Reagan tax cuts. It was, you know, at that point I was one of the rich people. (laughs) You know, we walked away with enough money that we could live in Europe for a year with three kids and then come back to the United States and start a brand-new business from scratch!"
But "perhaps more importantly," Hartmann added, "had that capital gains tax not been jacked around, up, down, whichever way, had it always been at, say, 50 percent, I'd probably still own that company. It would not have made flipping companies a useful thing" for the "Mitt Romneys of the world."
And had the Hartmanns not sold when they did, do they get to spend a year in Europe with their three children before returning to the US and starting another business?
Hartmann preceded the remarks I've cited by saying that working at the Hunter School in New Hampshire had left the couple impoverished, "basically out of money" and "broke," as he put it. Money was so tight that they needed to use a $10,000 line of credit and help from two partners to start the travel agency in 1983.
So the Hartmanns weren't wealthy at the start of this venture -- they became so by dint of their hard work and initiative. And when it came time to sell, they decided to do so ahead of a looming tax change that would have cost them dearly. Hartmann doesn't address at all the second point I made in my May 21 post, that his actions refute a central tenet of liberal economics, which is that higher taxes are not a disincentive to businesses. If that were true, the Hartmanns' CPA would not have given them a timely heads-up, nor would they have acted on it. Liberals are huge fans of higher taxes on the wealthy, unless they're the ones with wealth. They are much bigger fans of taxing wealthy people whose politics they abhor.
Is there anything keeping Hartmann from paying those additional tens of thousands in capital gains tax retroactively? God forbid that well-heeled business types don't pay their fair share, even if belatedly.
