Battlepanda: Capital Gains Tax Update


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Tuesday, December 13, 2005

Capital Gains Tax Update

I have written a long post arguing against Tyler Cowen's assertion that cutting the capital gains tax will have a positive effect on growth through a supply side effect. Now the Angry Bear (no, despite appearances, we are not related) have some numbers and graphs that appears back me up. This is important because I'm not dismissing Tyler's argument's out of hand. I am saying that the positive effects on the economy of the capital gains tax is swamped by other factors, and certainly does not offset the large loss in taxes that will then have to come out of the labor income tax.

Now, the bear is careful to point out, it's hard to prove a negative -- absence of evidence is not evidence of absence, and all that. But the lack of a clear relationship across countries between CT tax and growth is a good reposte to CG tax-cut cheerleaders who cherrypick individual countries whose pattern fits their theories as "evidence".