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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: michael97123 who wrote (43528)	3/12/2001 12:32:10 PM
From: Sam Citron	Read Replies (2) \| Respond to of 70976

Mike, On Taxes "As far as using these poor examples who sometimes sit in the box seats during a presidential speech that goes back to Reagan(maybe before) and was used by clinton as well. Would you mind translating this into English? Everything is ultimately regressive if it doesnt tax the rich at 99%. Such hyperbole is not helpful if you wish to engage in intelligent discussion. Bush's tax plan, while trying to please everyone, results in the biggest savings (as a percent of pretax income) for the biggest income taxpayers. Hence it is more regressive than the present system. Bush's main argument for his tax plan has been expressed in terms of equity -- that it is only fair to give those who pay the lions share of taxes the biggest breaks. Underlying this argument, I suppose, is an efficiency argument that bringing the maximum bracket down to 33% will increase productivity and investment. Galbraith, not surprisingly, is quite dubious as to the ability of such a tax cut to aid the economy since he feels it will not really increase the propensity of the rich either to spend or to invest. Personally, I am most concerned about an issue that I have never seen publicly addressed. The issue goes to the heart of capital mobility in a dynamic economy. Under the present tax laws there are many senior citizens who hold stock portfolios that can hardly be touched for fear of major tax consequences. These portfolios may have long term gains of 500 to 1000% built into them, representing decades of growth and inflation. Even at long term capital gains rates of taxation, the tax that would be owed is so high that in most cases the decision is made to simply wait for "stepped up basis" upon death of the owner. This impedes capital mobility and prevents capital from flowing into more productive investments. When you get right down to it, why should I be taxed if, say, I choose to move $5,000 from GM stock to AMAT stock? Any such tax discourages the mobility of capital, which is central to the efficiency of the market. By all means tax me on consumption and I'll be happy to pay a higher rate of tax than those of less wealth. But if you tax me on my investment you create a brake on the efficient allocation of capital that has no place in a modern dynamic economy. I would appreciate anyone's reaction to these thoughts. Sam