From: andy@SAIL.Stanford.EDU (Andy Freeman)
Subject: Re: The blame game
Organization: Computer Science Department,  Stanford University.
Distribution: usa
Date: Tue, 15 Sep 1992 22:10:29 GMT

In article <1992Sep15.120646.5473@mksol.dseg.ti.com> mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>In <1992Sep14.170104.6283@CSD-NewsHost.Stanford.EDU> andy@SAIL.Stanford.EDU (Andy Freeman) writes:
>>In article <1992Sep14.131935.5875@mksol.dseg.ti.com> mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>>>In <21510@rpp386.lonestar.org> jfh@rpp386.lonestar.org (John F. Haugh II) writes:
>>>>It's based on what happens when you raise tax rates on the upper class
>>>>and other such tricks that Clinton is proposing.  If my tax rates go up,
>>>>I will be investing every spare dollar in the nearest tax-sheltered
>>>>investment I can find.  Millions of other upper-class taxpayers are
>>>>going to be doing the same exact thing.  That will reduce tax revenue,
>>>>not raise it.
>>>
>>>Yes, but when you look at the whole picture, you will find that one of
>>>the better things to do with your money is to invest in long-term
>>>investments,
>
>>Haugh didn't write "long-term", he wrote "tax-sheltered".  Haugh
>>currently makes long-term investments because they pay off.  He'll
>>change to tax-sheltered for the same reason.
>
>Pardon me, but where did I say that he DID write 'long term'?

If tax-sheltered investments pay off more than long term ones, Haugh
will do the "right" thing.  Should we really assume that he'll be
stupid with his money?

>please explain to me how it is suddenly better, because of a 2%
>increase in tax rate, to shift from a long term investment, which
>would then be receiving a tax cut of more than 2%, to a tax shelter?

Because that 2% is going to be accompanied by opportunities for
tax-shelters that aren't there now.  That's what's Clinton has
promised, so it is absurd to ignore it when considering the effects of
his proposals.

>>>due to the targeted capital gains tax in the Clinton plan
>
>>Right.  We've tried that.  It was the pre-1980 policy.  It didn't work
>>as promised.  It was a subsidy program for various political
>>interests.
>
>Then we just need to make sure that it doesn't become that, don't we?

We tried before, and failed.  Why are we going to succeed this time?

>Seems to me that it all depends on what the criteria are to get on the
>'target' list.

The more specific the list entries, the more politics will come into
it.  It's easy for a lobbyist to make a "this will help my essential
industry by $10B" argument on political grounds.

>I don't think we've done what is being proposed before,

Sure we have.  It's called tax preferences to "help" important biz.
The definition that gets used is political, not economic.

>>We're going to bring back the buggy-whip industry.
>
>Cute comment, but I'm afraid the relevence simply doesn't exist.

Clinton is promising to revive dead industries; did I pick the wrong
one?  If Clinton's plan is not relevant ....

-andy
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