"The broad consensus among economists is that efficient, nondistorting tax rules would tax all types of income—properly measured—at the same rate." Really?
I can think of Glenn Hubbard (Columbia), Greg Mankiw (Harvard), Gene Fama (Chicago), Jude Wanniski (Polyconomics) and several other major economists who support preferential tax treatment for capital gains. At a minimum, it seems unfair to tax people for any inflation-based asset appreciation. As Mankiw noted in an article in the NY Times: "Throughout almost the entire history of the United States income tax, the tax rate on capital gains has been lower than that on ordinary income."
There's a good, economic reason for this. If we encourage capital investment, we are more likely to enjoy capital-based productivity gains which will lead to greater real income growth. At least, that's the supply-side argument (as outlined in Gwartney and Stroup, a CFA-curriculum text).
For a critique based on the economics of fiscal policy, it seems the reviewer dismissed a major school of economic thought. Even so, I liked the review--it gives me a good sense of what the book offers, and where its policy recommendations are likely to tend towards.
"The broad consensus among economists is that efficient, nondistorting tax rules would tax all types of income—properly measured—at the same rate." Really?
I can think of Glenn Hubbard (Columbia), Greg Mankiw (Harvard), Gene Fama (Chicago), Jude Wanniski (Polyconomics) and several other major economists who support preferential tax treatment for capital gains. At a minimum, it seems unfair to tax people for any inflation-based asset appreciation. As Mankiw noted in an article in the NY Times: "Throughout almost the entire history of the United States income tax, the tax rate on capital gains has been lower than that on ordinary income."
There's a good, economic reason for this. If we encourage capital investment, we are more likely to enjoy capital-based productivity gains which will lead to greater real income growth. At least, that's the supply-side argument (as outlined in Gwartney and Stroup, a CFA-curriculum text).
For a critique based on the economics of fiscal policy, it seems the reviewer dismissed a major school of economic thought. Even so, I liked the review--it gives me a good sense of what the book offers, and where its policy recommendations are likely to tend towards.