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Politics : Formerly About Advanced Micro Devices
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To: Taro who wrote (273409)2/11/2006 1:15:30 PM
From: neolib  Read Replies (1) of 1575614
 
It has been reported before, and by a couple of posters on this board (incl. me), that the GWB new tax cuts already was boosting the total treasury tax intake last year.

You need to be a little careful there. Lowering something like capitol gains tax rate very much encourages transactions which result in capitol gains, especially near the juncture of change from high rate to low rate. The OMB and others projecting tax consequences have long tended to use static estimates, that is they don't look at the rate of change of behavior X due to a law change. So their estimates are often off for that reason.

The problem with capitol gains laws in the USA is that they inhibit transactions. Lowering the tax rate allows more flexibility with transactions. It should have been analyzed from that POV rather than from a static POV wrt to transactions.

However, the real reason that capitol gains tax revenue has increased is largely that the last few years have become more favorable to asset inflation, and people are extracting some of that via taxable transactions.

This is simply a fact of the last several years, such as a jobless recovery (first significant one with declining job participation rate for the USA), and enormous extraction of wealth from real estate equity. You have to pay some attention to the underlying reason for things, or you can easily believe what you want to believe.
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