From: rja@redwood26.cray.com (Russ Anderson)
Subject: Re: Derailing the Reagan Revolution, part 2: Seven more years?
Originator: rja@redwood26
Organization: The 1991 World Champion Minnesota Twins!
Date: 25 Aug 92 14:36:07 CDT


In article <1992Aug25.173645.16913@oakhill.sps.mot.com>, pjm@anegada.sps.mot.com (Patrick J. McGuinness) writes:
> demon@desire.wright.edu (Stupendous Man) writes:
> >rja@redwood26.cray.com (Russ Anderson) writes:
> >> demon@desire.wright.edu (Stupendous Man) writes:
> >>> rja@redwood26.cray.com (Russ Anderson) writes:
> >>> > demon@desire.wright.edu (Stupendous Man) writes:
> >>> ...      
> >>> >> 	Another thing people conveniently forget is what that 1986 tax raise
> >>> >> was supposed to do.  It was supposed to be used to take a bite out of the debt. 
> >>> >> Hmmm.  I wonder where those dollars went?
> >>> > 
> >>> > Are you saying that Ronald Reagan was *wrong* for raising the capital gains tax?
> >>> 	(And yes, he was wrong to go along with it.)
> >
> >	^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
> >> 
> >> So now, was  Ronald Reagan was *wrong* for raising (proposing, with the congress 
> >> going along with him) the capital gains tax?
> 
> The implication that Reagan proposed the cap gains tax increase is wrong.

Huh?  The proposal came out of the Reagan Administration (specificly the Treasury 
Dept, championed by Donald Regan).  Remember Reagan talking about trying
to simplify the tax code so that people could file on a postcard?

> As explained by Beryl Sprinkl last night on McNeil-Lehrer,  they agreed
> to cap gains increase only because the Congressional Democrats insisted on it,
> as part of the need for "revenue neutrality".  In other words, a real tax cut
> without countervailing increases wasn't acceptable to the Democrats.

Interesting.  I was an econ undergrad when the original proposal was 
announced and remember spending quite a bit of time discussing the
implications on the economy.  There were changes made at the request of
congress (such as mortgage interest remaining deductable) but taxing cap
gains at the same rate as all other income was part of the original
proposal.  I suspect that the election year has clouded Beryl Sprinkl's
memory.

> Well, a funny thing happened on the way to the IRS.  As noted by Brett
> in various posts, the cap gains tax increase failed to raise significant
> new revenue. In fact, because of its negative impact on the creation
> of new jobs, and its *disasterous* effect on housing investment,
> this "increase" cost our economy, and our Government, a lot of wealth
> and revenue.
> 
> Meanwhile, the income tax cuts *did* pretty much pay for themselves.
> 
> So yes, increasing the cap gains tax was a mistake.
> 
> It was also a mistake in 1989 for George Mitchell to refuse to pass Bush's
> request to cut it. It was a mistake in 1992 for Congress to rebuff
> Bush's request (again) to cut the capital gains tax, and it is a mistake
> today for Clinton to propose income tax increases and no broad-based long-term
> capital gains tax cut.

GOVERNOR BILL CLINTON at the ECONOMIC CLUB OF DETROIT

DETROIT, MI, AUGUST 21, 1992
[...]
  Please understand me, I want to create more millionaires.  But I
want to do it the old fashioned way: by investing in America, and by
having people reap a reward in return for their investment in
American jobs and American goods and American services.

  That's why I recommended that we go beyond what the Congress
did last time and pass not a temporary, but a permanent investment
tax credit to encourage continuous reinvestment in new plant and
productive equipment here at home so that we can always be
competitive in the global economy.

  I also propose a 50 percent tax break for those who take risks in
making five-year long-term investments in new business enterprises.
A permanent research and development tax credit to reward
companies which invest in ground-breaking technologies, from high
definition TV to high speed computing.  I don't think we should
subsidize the export of American jobs with tax breaks.  And I favor
getting rid of tax breaks for companies that shut down their plants
here and move them overseas.

-- 
Russ Anderson    |  Disclaimer: Any statements are my own and do not reflect
------------------              upon my employer or anyone else.  (c) 1992
EX-Twins' Jack Morris, 10 innings pitched, 0 runs (World Series MVP!)
Newsgroups: alt.activism