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Politics : A US National Health Care System? -- Ignore unavailable to you. Want to Upgrade?

To: Lane3 who wrote (13519)	2/22/2010 12:45:10 PM
From: Road Walker	Read Replies (1) \| Respond to of 42652

But tax policy has an economic component. Actually, I think that the economic component should dominate. So IMO the two should be taxed at whatever rates produce the best overall economic result. I have not studied the economics of taxation to the point of having an opinion on whether or not there is economic benefit in taxing them at different rates. If it turns out that passive income is better taxed at a lower rate, so be it. Way to take a stand Lane.

To: Lane3 who wrote (13519)	2/22/2010 2:53:25 PM
From: TimF	Read Replies (1) \| Respond to of 42652

One benefit of taxing investment at a lower rate is that investment is more likely to be reduced, chased off, or seriously distorted by taxes than ordinary income is. Investment capital is more mobile than workers, and less likely to behave close to the way static economic analysis would suggest (less likely to just pay the taxes without changing behavior to avoid it). And even if they where equally subject to reduction, relocation, and/or distortion, there would still be the economic case that investment drives future productivity increases, which in turn enables more revenue without increasing, or even with a decrease in, the burden of taxation. Higher taxes on ordinary income also have a negative affect on investment more often than not, but not nearly as large of one.