Curbing Terrorism by Cutting Taxes

Maybe Congress will also do the right thing in another arena — by ignoring the latest, enormously cynical push, to cut capital-gains taxes. As a solution to our current economic woes, this one is actually counter-productive.

Cutting rich people’s taxes tends to be rich people’s answer to all societal woes. Is the budget deficit high? Cut rich people’s taxes. Is there a surplus? Cut rich people’s taxes. Is terrorism threatening the economy? Cut rich people’s taxes. Do you have the pain and hearbreak of psoriasis? Cut rich people’s taxe3s.

Right now is the worst time to cut capital gains taxes. The stock market is shaky enough already. Cutting rates now would encourage more selling, not more investing.

Tweaking the capital gains system may not be a bad idea for the longer term. I’d favor a stiff hike in rates for stocks held less than a year, and a slightly lower rate, indexed for inflation, for shares held more than five years (beginning today).

But the rich and powerful will not favor anything that shows common sense, much less good public policy. Why should they? They tend to get what they want.

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