tax cuts

[SilverDelta]

Can someone explain to me how lower capital gains rates stimulate the economy or do anything good for the economy? Lower tax rates sometimes encourage beneficial investment, but I don't think that applies to capital gains rates that apply to all investments.

If you have money to invest, you're going to invest it no matter what the capital gains rates, right? What else are you going to do, stuff it in the mattress?

Anyone care to enlighten me?

 

[Pa(b)st Prime]

Quote from SilverDelta:

Can someone explain to me how lower capital gains rates stimulate the economy or do anything good for the economy? Lower tax rates sometimes encourage beneficial investment, but I don't think that applies to capital gains rates that apply to all investments.

If you have money to invest, you're going to invest it no matter what the capital gains rates, right? What else are you going to do, stuff it in the mattress?

Anyone care to enlighten me?

I'm an anti-tax conservative but I semi agree with your point.

Two rebuttals though. Global institutional investors will seek out the best after tax yield. Hence the proliferation of off shore funds. Secondly it's important to note that lower tax rates allow greater amounts of money to be dedicated to investments and/or the purchase of goods/services that enhance business's bottom line.

 

[NanoTick]

Deficit spending may not be fair, but it works. Here's how:

Say a private company gets a tax cut of $1M, and invest the money in China, generating 20% return a year, or $200K;

Now because of the tax cut and deficit spending, the public incurs a national debt of $1M, thus paying an interest of 6% or $60K a year to China.

So USA as a whole (private+public) makes $200K-$60K = $140K, it's a good deal (this is why we still have low inflation despite the high deficit).

This obviously benifits the private company mainly, but when the $200K is taxed, the public is more than reimbursed.

The problem is that the government is not a business and it does not know how to make 20% on $1M at low risk. Only private companies know how to do it.

So after all it's not all that bad.

 

[myminitrading]

Quote from NanoTick:

Deficit spending may not be fair, but it works. Here's how:

Say a private company gets a tax cut of $1M, and invest the money in China, generating 20% return a year, or $200K;

Now because of the tax cut and deficit spending, the public incurs a national debt of $1M, thus paying an interest of 6% or $60K a year to China.

So USA as a whole (private+public) makes $200K-$60K = $140K, it's a good deal (this is why we still have low inflation despite the high deficit).

This obviously benefits the private company mainly, but when the $200K is taxed, the public is more than reimbursed.

The problem is that the government is not a business and it does not know how to make 20% on $1M at low risk. Only private companies know how to do it.

So after all it's not all that bad.

Lets say a company gets $1m tax break and rewards its upper management with bounces. But keeps tha avergae workers pay the same hummm.

 

[cgroupman]

Quote from SilverDelta:

Can someone explain to me how lower capital gains rates stimulate the economy or do anything good for the economy? Lower tax rates sometimes encourage beneficial investment, but I don't think that applies to capital gains rates that apply to all investments.

If you have money to invest, you're going to invest it no matter what the capital gains rates, right? What else are you going to do, stuff it in the mattress?

Anyone care to enlighten me?

Alternative type investments, especially shorter term, shorter holding period types of investing/trading, would be my only guess.

c

 

[Hydroblunt]

Quote from NanoTick:

(this is why we still have low inflation despite the high deficit).

You lost me on that statement, I just had to stop reading.

So after all it's not all that bad.

The ostrich defense. You do not want to know the truth.