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To: golfinvestor who wrote (91265)	1/4/2001 6:16:35 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 152472

"we need to eliminate the capital gain tax" If you want to stimulate the economy quickly, then you provide a tax cut to the lowest income taxpayers, where you are assured that the money will be spent immediately on necessary consumer items. If you reduce the capital gains tax, all you do is give more money to wealthier people, who spend only a portion of it. You also increase the gap between rich and poor, which simply aggravates the problem rather than helping solve it. Most economists believe that capital gains should be taxed at rates close to ordinary income, adjusted for the risk of the investment. But there are several useful tax reductions that would also work well, would not be inflationary, and would increase exports. Reducing the corporate income tax rate to a nominal level of 5 to 10 percent would be very helpful in competing with European countries that use the value added tax. Such a rate reduction would also reduce the wasteful expenditure of capital on mergers that don't produce anything more together than would be produced separately, since it would reduce the government subsidy for interest rate deductions. I don't expect that one to get much popular support. You could also have a flat rate tax, combined with a children's allowance and a variable rate children's allowance tax (increasing as income goes up). This is a more efficient way of producing tax revenues and eliminating the need for separate welfare assistance (and all that labor used in determining eligibility for assistance). This method was first proposed by economists at the Univ. of Michigan back in the early 1970's. You can see how popular the idea was. The problem with all tax reduction ideas is that special interest groups want to get a larger than justifiable piece of the reduction. You can't get an equitable tax reduction without first adopting strong campaign finance reform. Art