Free Republic

Capital gains tax revenues have increased in the three years since President Bush cut the capital gains tax rate, proving free-market economists right, and bureaucrats wrong. As Nobel laureate Milton Friedman often says, when you tax something you get less of it, and when you tax something less you get more of it. The "it" in this case is capital gains, which are the amount of money you make when you sell something for more than you paid for it. Capital gains have jumped because the rate reduction boosted the after-tax return on capital, reviving the stock market as well...

Republican and Democratic big government advocates whine about President Bush's proposed tax cuts, particularly cuts in the capital gains tax. They say it's a $70 billion giveaway to the rich. Listening to demagoguery about the rich, I've sometimes wished that we could find a humane way to get rid of the rich so that we might better focus on what's in the interests of the other 99.44 percent of us. Creating more equipment, whether it's earthmovers, computers or technical innovation, is called capital formation. The capital gains tax is a tax on capital formation, and when anything is taxed, one...

Republicans Fight to Get Tax Cuts Through By MARY DALRYMPLE, AP Tax Writer 12 minutes ago Republicans labored to advance their tax cut plans Tuesday, failing to muster enough GOP support in the Senate to extend tax cuts for capital gains and dividends beyond their 2008 expiration. The Senate Finance Committee voted 14-6 to endorse a package that would cut taxes by $60 billion over five years but would omit a GOP priority of preserving reduced tax rates for investment income. Sen. Olympia Snowe (news, bio, voting record) of Maine, a moderate Republican holding a pivotal vote on the committee,...

This is getting to be a habit, albeit mostly a pleasant one. The government revised its measure of first quarter economic growth again yesterday to 3.8%, up from its previous estimate of 3.5%, which was above its initial estimate of 3.1%. You may recall that the initial estimate inspired a great deal of fretting that the current economic expansion was heading south. But the 3.8% figure -- despite high oil prices -- matches the rate for the fourth quarter of 2004 and means that growth has now averaged close to a 4% annual rate for eight consecutive quarters going back...

Kerry and Bush have very different plans for future capital gains rate. Because this rate effects the return on investment, it has a major impact on stock valuation. Kerry plans to let the rate revert to 20%, while Bush plans to eliminate it. At the 15% rate, investors receive 85% of the underlying company's profits and future growth. Under Kerry, this return will drop 6% to 80%, after the increase to 20%. Under Bush, the probable yield remains 85%, since abolishing the cap gains tax is politically unlikely. However, if capital gains could be abolished the yield would increase 17%,...

If Kerry is elected, stocks should drop by 6%, or $1.2 trillion, since the yield on securities drops from 85% to 80%, other factors remaining equal. If Bush is elected, stocks rise by 17%, or $3.4 trillion, since yield increases to 100% from 85%. Difference between candidates is $4.6 trillion. However, to compensate for the lost $100-150 billion per year in tax revenues, Bush's plan should include a one-time capital gains tax on all capital appreciation prior to the 0% rate date. This $1 trillion in revenues could be paid over 4 years, wiping out the annual deficit. It opens...

It is a much-noted irony in American society that many of those whose work we value the most (e.g., teachers, nurses, moms) are paid much less than those whose services are (in the great scheme of things) not nearly as important. Greta Van Susteren is worth $900,000 a year? Levar Arrington deserves $10,000,000 just for signing a contract? Time Warner chairman Steve Case deserves $72,000,000 for running his company into the ground? As even the most committed of laissez-faire economists will admit, the capitalist system often produces a distribution of wealth that has very little to do with merit. Theodore...

It is a mystery why the Bush administration continues to press for full elimination of taxes on dividends when it has been clear for weeks that this is untenable, given the limited amount of revenue available under the congressional budget resolution, says Bruce Bartlett. By continuing to press for its plan -- no matter how stupidly it is implemented, perhaps with long phase-ins and a sunset provision -- it reduces the chances of enacting good supply-side tax measures such as those proposed by Ways and Means Committee Chairman Bill Thomas (R-Calif.). The Thomas plan calls for: o Cutting the tax...

<p>Twelve years ago, after the first U.S. victory in the Gulf, President George H.W. Bush was unwilling to invest his new political capital in much needed economic stimulus. Instead, he weakly called for a transportation bill — a huge political miscue. What he wound up with was a budget-busting Christmas tree adorned with expensive district-by-district ornaments. What he didn't get was enough pre-election economic growth to counter his misbegotten tax increase of 1990.</p>

September 9, 2002, 9:00 a.m. Following his Waco economic conference, President Bush told reporters about several tax initiatives that he may soon propose to aid beleaguered investors. Although he did not specifically mention cutting the capital-gains tax rate, it is almost certain that some action in this area will be included. Final decisions have not been made, but a final proposal is expected soon after September 11. I hope that the administration will avoid making purely pragmatic arguments for cutting the capital-gains tax, which should be cut. While such arguments worked in 1978, they have been much less successful since....

Slumping tax revenue and a rapid expansion of state spending have left Maryland facing a shortfall of more than $1 billion in the next budget year, the largest one-year deficit in state history, according to tax officials. Comptroller William Donald Schaefer announced the news yesterday as he officially closed the books on the fiscal year that ended in June. Schaefer (D) said a dramatic drop in capital gains taxes tied to the weak stock market is the primary cause of the shortfall. But he argued that the drop would have been less troublesome if Gov. Parris N. Glendening (D), who...