Questioning Higher Taxes, More Government
Richard Rahn, senior fellow at the Cato Institue, asks in his column in today’s Washington Times:
“Have you ever wondered why so many people see higher taxes and more government as the solution to every problem, despite the empirical evidence that more government reduces economic efficiency and growth and diminishes our liberties?”
Rahn takes on this editorial in the April 24, 2008 New York Times, and commented that the editorial was:
“(O)ne of its classic inane editorials in favor of higher taxes on labor and capital, which contained this gem of a sentence: "Memo to McCain: 401(k) savers get no benefit from a low capital-gains [tax] rate."
“Everyone who has ever taken basic economics should know a lower tax rate on an investment (i.e., the capital-gains tax) will lead a higher rate of return, and hence the investment will be worth more. Other things being equal, lower capital gains tax rates will lead to higher stock prices, and all who hold stocks will benefit, whether or not they pay a particular tax on that stock. Though this concept is not difficult for most people to understand, it seems beyond the knowledge and reasoning ability of those who write editorials for the New York Times.”
He then provides example after example “of what those who advocate higher taxes on capital and labor either do not understand or willfully choose to ignore.” The column is worth reading if you need to arm yourself with “talking points” to combat the inanities of "tax-and-spenders" that you may come into contact with.