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I just ran across this bit in the news:
Lieberman was quick to tout his proposals to get the economy moving faster: a zero capital gains tax rate for direct investments in new, small technology companies. [...] He also proposed a one-year 20 percent tax credit for investments in information technology.
I'm just shocked that anyone would be so ignorant of economics to actually suggest something this stupid. After all, the current recession is (like all recessions) due to malinvestment -- it's a liquidation of bad, overpriced investments (mainly in information technology and direct investments in new, small technology companies) in order to get capital to make better investments.
So the solution is... manipulate the market so as to make people and companies invest in IT and tech startups again?? The fact that the government favors them will not change the fact that they were bad, overpriced investments -- all it will do is a.) take capital out of the market, thus slowing the recovery, and b.) set us up for another recession as soon as the artificial stimulus is removed.
This is substituting nostalgia ("Oh, remember when tech stocks were a quick, easy path to riches!") for economic thought. The current recession is a direct and inevitable result of the artificial (i.e. Fed-induced) boom of the late 90's -- if we create another boom, we also create another recession.
This said, any proposal to lower taxes is, in general, a good thing -- I think people have the right to their own money. This said, making "targeted" tax cuts to drive investment into the worst possible place is about the worst way to do a tax cut I can imagine.
Lieberman was quick to tout his proposals to get the economy moving faster: a zero capital gains tax rate for direct investments in new, small technology companies. [...] He also proposed a one-year 20 percent tax credit for investments in information technology.
I'm just shocked that anyone would be so ignorant of economics to actually suggest something this stupid. After all, the current recession is (like all recessions) due to malinvestment -- it's a liquidation of bad, overpriced investments (mainly in information technology and direct investments in new, small technology companies) in order to get capital to make better investments.
So the solution is... manipulate the market so as to make people and companies invest in IT and tech startups again?? The fact that the government favors them will not change the fact that they were bad, overpriced investments -- all it will do is a.) take capital out of the market, thus slowing the recovery, and b.) set us up for another recession as soon as the artificial stimulus is removed.
This is substituting nostalgia ("Oh, remember when tech stocks were a quick, easy path to riches!") for economic thought. The current recession is a direct and inevitable result of the artificial (i.e. Fed-induced) boom of the late 90's -- if we create another boom, we also create another recession.
This said, any proposal to lower taxes is, in general, a good thing -- I think people have the right to their own money. This said, making "targeted" tax cuts to drive investment into the worst possible place is about the worst way to do a tax cut I can imagine.
