Do you think lower taxes on dividends and capital gains can help hasten an economic recovery?

Answer 1

Only when the government is not running a deficit. The government must lower spending as well as taxes. This is exceedingly difficult because most people vote for whomever gives them handouts. Very few people vote for someone who restricts handouts and tries to run a tight ship. They don't see the forest for the trees. "Live for today, the heck with tomorrow". These same people run up their credit cards and declare bankruptcy.

That being said, in the short term, yes, a capital gain and dividend tax break can stimulate the economy because it puts more money in the hands of the people which is either spent on products or invested. Both help the economy. However, a huge government deficit will eventually squelch that benefit.

Answer 2

No, I don't. Economic recovery means that people are spending their money. The theory behind cutting these taxes to spur economic growth is that the income earned that isn't taxed will be spent.

The problem, however, is that the people who are taxed on dividends and capital gains are a really tiny fraction of the US population who also happen to be extremely rich. Even if this group spends the entire amount of money that was taxed, that doesn't generate nearly the same amount of economic recovery that giving a general tax cut to lower and middle class people would create.

To make a more simple example, if you take someone who makes $10,000 a year and someone who makes $1 million a year the same tax cut of 10%, who is more likely to spend the entire amount of the cut? The answer, if it isn't obvious, is the person earning $10,000 because they have so little income to begin with.

The fact that there is more people earning at the lower end than the higher end is a stronger argument for giving tax cuts to the poor and middle class than for the wealthy.

Answer 3

No. Whats the incentive to build and hire here in the US? If there'd be any incentive to build and hire, it would be abroad, not here. It would only help wealthy heirs be able to add some new Rolls Royces to their collections or to buy that summer home in Monaco, at best to hire a new cabin boy for the yacht.

Answer 4

I don't know about all that, but lowering taxes gets my vote. I was under the impression that we were recovering nicely, though a bit slower than expected.