Thursday, January 24, 2008

Reflecting On the Bush Tax Cuts

This paper, whose co-author is an acquaintance of mine and a Mason student, summarizes the effects of the Bush tax cuts, and adamantly argues that they should be renewed.

A couple of interesting tidbits:

"When the capital gains tax is cut, asset holders are inspired to sell." I wonder if there's a way to truly maximize revenue by raising and cutting the capital gains tax (it would have to be done without a recognizable pattern, but I tend to think the tax being lower causes people to sell).

“Germany, Switzerland and many other countries do not tax capital gains at all.” America as the nation with the highest taxes - what kind of backwards world is this?

"Seventy-nine percent of all returns reporting capital gains were for households with incomes below $100,000 and half had incomes below $50,000." So it's not just a tax cut for the rich - those calling for the return of the tax to higher levels ought to read this.

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Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty