loquitur

You meant "Loq," right?
I'm much better looking than Norquist. And a better speaker. To say nothing of my encyclopedic omniscient wisdom.


On the capital gains issue: there was a chart in the WSJ today that showed capital gains (and taxes paid on them) consistently increasing whenever there was a cut in the capital gains rate. I know what the WSJ was trying to say, namely, that we should cut the rate to stimulate more sales and generate tax revenue.

Bunkum. What that chart shows is that people are gaming the system. Remember, capital gains aren't like normal income -- the person getting the gains chooses when to have the gain; if s/he doesn't want gain, s/he won't sell the assets. Peolpe know capital gains rates are a political football, so they hold back on selling assets until an advantageous time -- with the "advantage" being dictated almost entirely by politically-motivated changes in the tax rates for capital gains. That is economically distortionary. Assets should be sold at a time when it makes economic sense to sell them, not when it seems strategically wise from a tax perspective.

What this suggests to me is that whatever the capital gains rate is, it should not be continually adjusted. Some sort of rate should get set and then sit for 10 years and then get re-examined. The decision about when to take capital gains (and thus when to pay capital gains taxes) shouldn't be tax-driven -- it should be economics driven.