Wednesday, January 23, 2008

A Real Idea for Economic Stimulus

If people knew that their tax rates were going up next year, they’d work to make sure that more of their income is taxed at this year’s lower rates. Investors would likewise have a giant incentive to cash out their capital gains now to avoid paying higher taxes later. In 1986, stock sales doubled as taxpayers rushed to avoid the capital gains tax rate increase scheduled for 1987. If people pour their stock gains into yachts and fast cars, that’s pure fiscal stimulus.

The idea? Repeal the Bush tax cuts a year it all for the background.

I may well be accused of being a tax-and-spend liberal. I'd be willing to engage that debate if anyone wants to.


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