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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (746969)	8/4/2006 12:01:28 PM
From: TimF	Respond to of 769670

If you tell people that one form of 'income' is more valued then others (& thus, rewarded with a lower tax rate) you are starting down that long, slippery road again of having the government pick the winners and the losers --- and you are well on you way to lowered economic growth potentials again. Yes I pointed out that that was a problem. How slippery the slope actually is determines whether the extra economic growth from lower taxes on investment is worth it. If its very slippery than a good argument can be made to just have the one rate. OTOH if you are going to have a ton of different rates (different brackets, different rates on different types of income and gains, a myriad of deductions and credits...) than it make sense to have a lower rate for investment. If your already at the bottom of the slope you can't slide down more anyway and you might as well get the extra growth. OTOH if you have one reasonably low rate for everything, and there is any reason to think that this situation will be durable, then its probably best not to tinker even when the direct effects of the tinkering are clearly positive. I don't believe that the current preferences in our tax codes for DEBT are appropriate, or advisable. For mortgage debt - In theory no. Faced with our current situation it would be hard to change. If were creating society from scratch I certainly would have the deduction. If we can get one reasonably low rate simple tax code then it would probably be worth it to scrap the deduction. But scrapping it would be painful for many and thus perhaps politically impossible. For business debt - Businesses don't pay taxes on their revenue but their net profit. If a company pays debt they don't make as much of a profit. In fact the debt might be more than the net earnings of the company. Is a company that is losing money supposed to pay income tax? Equity insurance isn't a cost to the company, its a cost (through dilution) to the other shareholders.