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To: c.hinton who wrote (2564)	11/7/2008 2:04:26 PM
From: TimF	Read Replies (2) of 3816

where is the link between raising taxes and making a bigger bubble? How many times to I have to repeat it? I'll try once more, and then assume you either don't bother to read replies to you or are otherwise arguing in bad faith. The tax code provides an incentive to invest in housing, and to borrow to do so. Raising tax rates increases the power of that incentive, so its shifts more investment towards housing, and increases the incentive to borrow in order to buy a house, or to borrow against any equity you already have in a house. The higher the normal rates are, the more they are greater than the 0% rate on mortgage interest, and the zero percent rate on most capital gains from owner occupied home sales. This greater difference creates a greater incentive, to inflate the bubble faster and harder.

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