I need some help understanding something.

Watching and listening to Barack Obama at a campaign rally this morning, he
again outlined his economic plan to stimulate the economy.

Part of his proposal is the elimination of capital gains taxes on small
businesses so, as he puts it, they can hire more employees and expand.

I don't get it.

My simple understanding of capital gains taxes is that it applies to an
increase in value of something you bought or invested in, like a house,
stocks, or, in the case of a small business, it's value of when it started
and that when you sell it.

So, how does the elimination of capital gains taxes on a small business
allow it to grow and hire more employees?
For the owner of a small business, it seems to me the only time there would
be a benefit is if he/she decided to sell it.
If they are continuing operations and trying to expand, there's no capital
gains tax to be paid anyway.

Seems to me that holding down *Income* taxes on small businesses would help
provide the money for further investment and growth of the company. What
does the elimination of capital gains taxes do for the future of the
company, other than eliminate taxes owed when the small business owner sells
out.

Am I wrong or is this just a bunch of economic doubletalk that sounds good
but has virtually no meat to it?


Eisboch