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John Edward, a resident of Chelmsford who earned his master’s degree at UMass Lowell and who teaches economics at Bentley University and UMass Lowell, contributes the following column.

The day after President Obama’s State of the Union address, the front page of the Boston Globe had an interesting pair of headlines. The lead was “Obama wants higher taxes on rich, incentives for jobs.” Also above the fold was the headline “Romney’s returns open a window to the wealthy.” Intentional or not, that front page was full of contradictions.

On one hand, President Obama is calling for fairness. On the other hand, he may also be opening new windows for wealthy people like Presidential Candidate Mitt Romney to benefit.

In another example of Winners Stay, the wealthy get both exclusive access to opportunities to make more money and they enjoy a lower tax rate. Wages earned for work are taxed at rates up to 35 percent. What little interest we get on modest savings accounts at local banks and credit unions is taxed up to 35 percent. When the money does the work, the investment returns get a preferential rate of 15 percent.

What we need is less government interference in the form of preferential treatment for those who need it least. What we need is tax neutrality. What we need is a return to a policy of the Reagan era. The Tax Reform Act of 1986 established an equal tax rate for wages and capital gains. Anything else is unnecessary, inefficient, and harmful government interference in markets.

Another contradiction is that the reduced taxes on capital gains are designed to be an “incentive for jobs” as the President is seeking. The theory is that lower taxes will encourage investment and therefore create jobs. read more »