Two interesting points that I hadn’t really thought about:
Inflation. If an individual buys a stock for $10 and sells it years later for $12, much of the $2 in capital gain may be inflation, not a real return. Inflation â€” and expected inflation â€” reduce real returns and increase uncertainty, which suppresses investment, particularly in growth companies.
One solution is to index capital gains for inflation, but most countries instead roughly compensate for inflation by reducing the statutory rate on gains or providing an exclusion to reduce the effective rate.
Double Taxation. Corporate share values generally equal the present value of expected future earnings. If expected earnings rise, shares will increase in value, creating a capital gain to the individual. But those future earnings will be taxed at the corporate level when they occur; thus hitting individuals now with a capital gains tax is double taxation.
Dividends are also double-taxed, with the result that the U.S. tax system is biased against corporate equity and in favor of debt. This destabilizes companies and the overall economy.
Ernst & Young calculates the current U.S. combined corporate and individual tax rate on capital gains at 50.8% â€” compared to an OECD average of 42.0%.
Our tax burden on dividends is equally out of line. The U.S. disadvantage will get much worse next year with the scheduled tax hikes on capital gains and dividends.
I know I’ve said this many times before but I’m 100% for a low flat tax rate (say 10% to 15%) on capital gains, dividends (not taxed at corporate level), and earned income. Then, we could move on from these discussions. Our government should be able to operate on a 10% to 15% tax.
I read this interview last night and thought I would share it with you. I thought Reed’s response to the following question was excellent:
Israel Wayne:Does your personal religious faith in any way shape your view of macro-economics? Please explain.
Lawrence Reed: First of all, I donâ€™t much care for the adjective â€œreligious.â€ To me, â€œreligionâ€ is manâ€™s attempt to gain Godâ€™s approbation through works. Christianity, by contrast, is a personal relationship with Christ that starts with Godâ€™s grace and oneâ€™s acceptance of Christ as his (or her) personal savior.
Secondly, I wouldnâ€™t say my faith shapes my view of the economy any more than it shapes my understanding of the weather or how a car runs or a plane flies. Objective, observable facts, evidence and natural laws are the keys in such things, though I fully appreciate that the only reason we can even have such scientific tools is that we live in an ordered universe, itself a divine creation and gift.
Where my faith does play a part in economics is in the area of whatâ€™s right and whatâ€™s wrong. My understanding of Christian principles about human nature and proper behavior leads me to appreciate the uniqueness and preciousness of each individual. It leads me to oppose excessive concentrations of earthly power in any mortal hands. Christian principles call for honesty, humility, patience, respect for life and property, self-discipline and voluntary interaction over brute force. They argue definitively against cheating people through currency debasement, redistributing their wealth through taxation, or pretending that a handful of â€œexpertsâ€ with power can or should plan the lives of everybody else. My Christian principles tell me that reforming the world begins and ends with individual self-reform and cannot be achieved by â€œenlightenedâ€ planners pushing the rest of us around.
The Eighth and Tenth Commandments against coveting and stealing by themselves should invalidate most of what the federal government does these days. â€œThou Shalt Not Stealâ€ is followed by a period, not a qualifier. It does not say, â€œThou Shalt Not Steal except under the following conditions: the other guy has more than you do, you really want it, youâ€™re absolutely sure you can spend it better than the guy who earned it, or if a politician is available to steal it on your behalf.â€
I like the older stuff. The classics from the 50s and 60s. That said, it’s hard for me to pick out an absolute favorite.
One that I just bought that is really pretty is
Percy Faith’s “Christmas Is…”
It’s got a very nostalgic sound to it (probably because it’s from 1966). It’s kind of like elevator music so it may not be for everyone. I love his rendition of “I’ll Be Home for Christmas” and “Silver Bells.”
If rock is more your style…
Chris Isaak’s “Chris Isaak Christmas”
This is a great disk.
Finally, two more that are excellent are from Andy Williams…
Andy Williams – “The Andy Williams Christmas Album”
Andy Williams – “Merry Christmas”
I know that’s not just one selection but when you have as many CDs as I do (1,700+), it’s hard to pick out an absolute favorite. Yes, I realize 1,700+ is an excessive number of CDs. It’s my weakness.