Tag: Capital Gains

California, the land of anti-Trump “resistance”, has its own problems both irresistible and intractable – mounting public pension debt, underfunded schools, and a revenue stream too dependent upon capital gains. David Crane, a Stanford lecturer, past economic aide to Governor Arnold Schwarzenegger and co-founder of Govern for California, weighs the health of the state so bitterly opposed to Trump.

Richard Epstein grades the Trump Administration’s proposal for tax reform, explains the first principles of effective tax systems, and challenges the notion that progressivity is essential to an equitable tax code.

Hillary and Bernie Both Want to Raise Investment Taxes Dramatically


usa-election-democratsI thought a goal of smart tax policy was that you raised taxes on what you didn’t want (like pollution) and cut them on what you did want (like more investment and work). Over at Forbes, Ryan Ellis notes that Hillary Clinton and Bernie Sanders are proposing the highest capital gains tax rates in history, 47.4% for Clinton and 60% for Sanders vs. 23.8% today.

In the case of Clinton, according to Ellis, the math is a top headline rate of 39.6% + the 3.8% Obama “net investment income tax” + a new 4% high-income surtax. (By the way, the top capital gains tax rate was 20% when Bill Clinton left office and 15% under President George W. Bush.)

Now as it happens, the Tax Foundation just released its analysis of the Clinton plan, summarized thusly:

The Libertarian Podcast, with Richard Epstein: “On Trump and Taxes”


Are members of the hedge fund crowd really just getting lucky by pushing paper around? Is the tax treatment of carried interest a national scandal? Is there a principled case for taxing capital gains at a different rate than ordinary income? And what’s the right approach to take towards comprehensive tax reform? Those are some of the questions I explore with Professor Epstein this week as we examine Donald Trump’s criticisms of financial elites. Listen in below or subscribe to The Libertarian podcast via iTunes.

In Defense of Corporate Short-Termism


SummersIn a new Financial Times note, Larry Summers defends some key elements of Hillary Clinton’s “pro-worker” economic agenda: higher minimum wage, mandated family leave benefits, tax incentives to boost corporate profit sharing. Of course, since these agenda items come from a Clinton-aligned Center for American Progress report that Summers himself co-wrote, he is really just talking his own book. Not so interesting. But his counter-argument or addendum to Clinton’s “quarterly capitalism” or “short-termism” agenda is thought-provoking:

At the same time scepticism about whether all horizons should be lengthened is appropriate. A generation ago, the Japanese keiretsu system of cross ownership of corporate shares — which insulated corporate managements from share price pressure — was seen as a strength. Yet, Japan’s manifest macroeconomic difficulties aside, companies lacking market discipline have squandered leads in sectors from electronics to automobiles to IT.

Managements of companies that are dissipating the most value, such as General Motors before it was bailed out by the US government in 2009, have often been the most enthusiastic champions of long-termism. Market participants who are willingly placing high valuations on Silicon Valley start-ups that lack any profits and have little revenue may be putting too much, not too little, weight on the distant future. That, at least, is the implication of those who see the inflation of a “technology bubble”.

Rules for Conservative Radicals


imageSome members of Congress say that IRS Commissioner John Koskinen should resign or be impeached. Under the gentlemanly standards of Marquess of Queensbury rules, a case can be made for that.

But what about Saul Alinsky rules? Why don’t we let him stay in office and make him the face of the Democratic Party? We can even tie him to Hillary: “Clinton’s capital gains tax will make John Koskinen very happy!” To top it off, he’s a middle-aged, white male. And, while we’re at it, why don’t we do something similar with Planned Parenthood?

Just Because Hillary Clinton Thinks Corporate ‘Short-Termerism’ Is a Problem Doesn’t Mean it Isn’t



The FT’s Ed Luce takes a look at the “quarterly capitalism” or “short-termism” issue, concluding that it has merit as well as political legs. He points out that “US investment is at its lowest since 1947″ but that last year “S&P 500 companies spent more than $500bn on share buybacks.” He doesn’t, however, think further raising the capital gains tax rate for short-term investment is an effective solution — as Hillary Clinton wants to do — versus reforming executive pay:

It is doubtful such tinkering would be enough to alter investors’ time horizons. The lure of a bird in the hand would still outweigh two in the bush. Many big investors, including pension funds, are already exempt from taxation. Nor is [Clinton’s] proposal likely to deter shareholder activists, whose gains from holding C-suites to ransom will outweigh any new penalties. As long as chief executives’ compensation packages are set by the share price, little is likely to change.

Hillary Clinton Has a Smart Idea to Fix the Economy. Republicans Should Steal It


Hillary_Strategy_Shutterstock_500x293Bad news for Republican presidential candidates searching for a fresh message beyond moldy Reagan nostalgia and tired anti-Obamaism: Hillary Clinton just stole a potentially powerful theme right from under them.

In her economic policy speech Monday at the New School in Manhattan, Clinton said Corporate America deserves some of the blame for the weak and uneven economic recovery. Big business, she said, suffers from “short-termism” and too often practices “quarterly capitalism” where “everything is focused on the next earnings report or the short-term share price, and the result is too little attention on the sources of long-term growth: research and development, physical capital and talent.”

Now, it’s surely tempting for Republicans to view Clinton’s critique as just another Democratic attack on “job creators,” or as campaign strategery from a centrist Democratic candidate looking to ward off a more liberal rival. But there’s more to it than that, and the GOP should pay attention.