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Self-styled "patriotic millionaire" Art Lipson argued recently in this newspaper that U.S. Sen. Orrin Hatch, R-Utah, ought to support raising capital gains taxes on carried interest earned by private equity managers and investors, in an effort to encourage federal deficit reduction.

Reducing the deficit is a laudable policy goal, if accomplished through spending restraint. But in the debate over capital gains taxes — which are really taxes on investment — fundamental fairness and encouraging economic prosperity are of greater importance.

So how can we best achieve fairness and prosperity through taxes on investment? It should be the aim of tax and spending policy to permit Utahns and Americans to keep as much of their own money as practically possible. If capital gains taxes are lower than ordinary income taxes, then we ought to strive to lower ordinary income tax rates to rates similar or comparable to capital gains taxes — or even lower if it is practically feasible to do so.

Keeping taxes low for everyone ensures that everyone is treated equally and fairly. Putting more economic decisions into the hands of individuals, families and businesses ensures that they are as free as possible to pursue their own economic prosperity in the way best suited to their needs and interests. And as Adam Smith recognized 240 years ago in The Wealth of Nations, individuals and institutions acting privately to maximize the value of their investments serve the public interest by promoting the maximum prosperity of society as a whole.

For progressives, on the other hand, the answer is to take as much money from Utahns and Americans as they can politically justify. In this view, the goal shouldn't be to lower the taxes of working and middle-income Utah families, but to raise capital gains taxes on private equity investment through higher taxes on carried interest. This difference in vision has real and harmful consequences.

First, it is harmful to Utah retirees. The Utah Retirement Fund, with more than 156,000 members, has significant investments in private equity, to the tune of $3.2 billion. Some, if not all, of the additional costs to private equity from higher capital gains taxes would be passed along to organizations like the Utah Retirement Fund, taking a bite out of the retirement plans of each of these pensioners. This might not harm "patriotic millionaires" very much, but it would add a burden to the lives of Utah's middle-class seniors and retirees, many of whom are still struggling to recover from the financial catastrophe of the Great Recession.

Second, it would reduce the economic prosperity of many middle-class Utahns. Private equity investment and the firms that manage the resources have invested nearly $41 billion in the state since 2004 — creating tens of thousands of jobs along the way that support middle-income and working Utah families. The tax hike that Lipson calls for would not only reduce this type of job production from private equity in the future, but would also be detrimental to the 280 current private-equity-backed companies in Utah. These businesses are responsible for the jobs that nearly 20,000 Utahns and their families rely upon for their economic well-being.

When you increase the costs of doing business by raising taxes, smart business owners respond by changing their behavior to remain competitive in the market. Since America's capital gains taxes are already the sixth highest among the world's 34 most developed nations, raising these taxes further would likely lead to a reduction in local private equity investment and related employment, in order to maintain international competitiveness. In a state like Utah, where our business community often competes globally and with a growing private equity industry, increasing capital gains taxes could be especially damaging.

American leaders should reject calls like Lipson's to increase America's already high capital gains taxes. It is bad tax policy to reduce the federal deficit on the backs of retirees while undermining prosperity by destroying good jobs. It should be accomplished through spending restraint instead. Fortunately, Utah taxpayers and businesses have allies in the form of Sens. Hatch and Mike Lee, both of whom have signed the Taxpayer Protection Pledge committing to oppose these types of harmful taxes.

Derek Monson is policy director at Sutherland Institute, a conservative think tank in Salt Lake City. Paul Blair is state affairs manager at Americans for Tax Reform, a taxpayer advocacy organization based in Washington, D.C.