http://krugman.blogs.nytimes.com/2012/01/18/the-history-of-capital-gains-taxes/
Quick and short article. Despite what some politicians argue, tax rate on long-term capital gains is at an all time low. A lot of republicans have been pushing for dropping the tax even lower. The most recent drop in capital tax was during the Bush administration, and coincidentally the US experienced its largest deficit.
Can the US really handle another tax break?
While I acknowledge the fact that low rates of capital gains taxation may have a detrimental effect on the deficit, I would like to create a scenario where they may be beneficial to the economy.
ReplyDeleteLow capital gains taxes have the potential to generate more investment as investors are willing to take risks when they know that they are going to be able to keep more of their capital gains. Investment has the potential to create jobs as companies are able to grow with more investment. However, I acknowledge the fact that not all companies are going to increase employment with more investment. I just think that there is some justification for low rates of taxation on capital gains.
Me too.
DeleteHigher taxation would result to the increase of responsibility of the government. How much should we depend on the government to generate a positive flow in this economy? Or should we minimize taxation and focus on the amelioration of the market? This reminds me of last week's class.
ReplyDeleteI agree with Sam that higher taxes would likely increase government responsibility. I think the more the government gets involved in the market place the worse off we will be.
ReplyDeleteWhat about the protection the government offers? Perhaps inefficiency is the price we must pay in order to have available the many benefits governments offer.
ReplyDeleteI think that far to often economists cry that misplaced tax dollars is the reason why an economy may be suffering, and that governments cannot be trusted to spend tax revenue appropriately. Sure, there is always going to be the issue of wrongly distributed public spending, but it is important that we do not let a poor economy trick us into thinking that taxes need to be cut. Public spending is a good thing (especially on public goods)
The government is in place to perform actions that the average citizen cannot. The benefits are worth the inefficiencies. Let's raise taxes, who's with me?
Max, I'm right there with you
DeleteI agree with Max on this one, the tax rate on long-term capital gains was reduced in 2003 and this reduction was supposed to expire in 2008. The low tax rate was pushed back through 2010 under President Bush and again moved back to 2012 under President Obama. Finally raising taxes may be a good idea in this circumstance to receive the benefits that the government has to offer.
ReplyDelete