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To: Freedom Fighter who wrote (1800)	6/16/1999 8:30:00 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 3536

And the capital gains should not count as income (IMHO) because the proceeds from the sale to me are offset by someone else's purchase of the shares so no new money is available for lending. I don't know if I agree with that. First the issue is not that it is income or that new money is available for lending. It is simply what individual households are doing. I accept that increases in previous investments should not be included in current savings. What I am arguing for is not having an asymmetrical treatment. If you don't include the capital gain you shouldn't include the capital gains tax. Afterall the tax is dependent on the gain and is financed by it. The tax does not reduce income as it is paid for by the investment gain therefore it should not be a charge against savings. If you exclude both sides of the capital gains you get a truer picture of what households are doing and that is the purpose of the savings rate. And if you net the tax out you see that the savings rate has remained fairly constant at somewhere near 8-10%.