To Respond to a Post - Paddy AIS On Capital Gains

I think that his post was very well constructed and had a lot of good information that portrayed both sides in a very good light. My post is going to focus solely on the third paragraph of his post because it is the one that I find the most incorrect myself (obviously he was portraying the arguments of the other side, but I feel as though I should challenge a few of his justifications).

I will start off with why investments seem as though they are more favorable. Warren Buffet has many times made the claim that investments are attractive because of the lack of work needed to maintain them. You do not need to work eight hours a day to make investments, you can simply allow the company that manages your investments (that is if you are wealthy enough to have a portfolio) do the work for you. This is a reason why the argument that a tax on profits hurting the economy is somewhat nonsensical. People make investments because it is EXTRA income that they can yield from the money they have already made. No matter what the amount of that extra income, as Buffet says, no large effect will be seen on the incentive value.

The next argument I have a problem with is your analysis of the McBride article. I read the article, and I feel as though he concludes the opposite of what you are saying. Taxes on capital gains had stayed the same for ten years as the "business cycle" remained on its ever present loop. This is evidence that this economy will fluctuate with or without the "extra" taxes.

I think that the most logical conclusion here would be to lower income taxes for those that do not make enough to qualify as "middle class" and to increase capital gains taxes for those who make more than a million dollars a year to fifty percent of the "profit". This was proposed by Barney Frank in 2007 as a measure to stop the dip that was starting to occur. A lot of blame is put on Frank for this measure, but it was voted down by a 62 senator majority and never left the senate.

It was in the loo of this policy that the downturn was allowed to occur.

This seems to me to be the most reasonable.

Please post responses to any part of this post because I would be interested to see what people think, and to contest the way they justify it, as I think that any discussion such as this should be a debate, and not a one sided monologue - use studies and facts though please.