Our Secret Sauce
Published: December 6, 2018
Josh Haner/The New York Times
An interesting thought occurred to me today—what if industrial giants sat down with ordinary people like you and me and ironed out some real solutions to our capital gains crisis?
With the election season over, maybe you’ve forgotten about capital gains, but I certainly haven’t. It would be easy to forget that the problem even exists, when our headlines are constantly splashed with the violence in Sudan, the authoritarian crackdown in Comoros and the still-unstable democratic transition in Uganda. But the capital gains problem is growing, and politicians are more divided than ever. Republicans seem to think that capital gains can just be ignored. Democratic politicians like Harry Reid, on the other hand, seem to think that nonsensical rhetoric will substitute for a solution.
But the Democratic party of Harry Reid is not the Democratic party of Franklin Roosevelt. FDR wouldn’t stare down the opposition, he'd break ranks with members of his own party because he'd understand that the fate of the country, and his own political career, depended on a lasting solution to the problem of capital gains.
It's good to see the talks between the president and congress getting off to a solid start, but we know there will be plenty of partisan fireworks before any deal is cut. If I had fifteen minutes to pitch my idea to politicians, I'd tell them two things about capital gains. First, there's no way around the issue unless we're prepared to spend more: and not just spend more, but spend smarter by investing in the kind of national infrastructure that makes countries succeed. That's going to require some tax increases as well, but as they say, "When in Rome."
Second, I'd tell them to look at China, which all but solved its capital gains crisis over the past decade. When I visited China in 1998, Kiki, the cabbie who drove me from the airport, couldn't stop telling me about how he had to take a fourth job because of the high cost of capital gains. I caught up with Kiki in Shanghai last year. Thanks to China's reformed approach toward capital gains, Kiki has enough money in his pocket to finally be able to afford a smartphone for his kids.
That's all it takes. Don't expect to see any solutions as long as politicians insist on playing a high-stakes game of chess with one another. America's got to call a time-out.