On Tue, 06 Mar 2012 13:27:05 -0600, jim
wrote:

Ed Huntress wrote:

On Tue, 06 Mar 2012 11:56:32 -0600, jim
wrote:

Ed Huntress wrote:


Meantime, we live in fear of "scaring it away" and race to the bottom,
allowing $1.00/hour wage-rate countries to dictate the world wide
patterns of manufacturing and capital flows, with undertermined
effects.

Capital gains tax does not scare capital away.
It really does the opposite. It taxes capital when it is liquidated.
And more important higher gains tax does not discourage investment in
higher income producing assets in favor of non-producing
assets.

The problem is that once you have lowered
the tax rate below ordinary income, then it becomes problematic
to raise it back up again. If the tax were raised now,
then you can expect the price of gold, stocks, houses and other
assets would all plummet as people sell off assets to realize their
gains
before the tax goes up. That illustrates that it is the
tax benefit that has driven up the price of those assets to begin
with.

Ok. Personally, I have a hard time following the pea under the shells
when economists explain these effects.

But that isn't what I meant, in any case. I was talking about the fact
that China and other low-wage countries have an inordinate amount of
leverage in trade because of their low costs. China may lose some of
its edge as wages increase, but they still have a lot of manipulative
power, as a control economy, to force events against the tide of
normal market forces.


Sorry I have no idea how that relates to what
David Stickman wrote about capital gains.

Hmmm...I've lost track of it, but I don't think that was responding to
Stockman. Whoever first said "scaring away" was it.

--
Ed Huntress


I watched the US machine tool industry collapse as I was reporting on
it, while Japan was using banking cartels to stockpile machines in the
US desert southwest, waiting for market upticks to let them flood the
market while US builders ramped up production again. It was
devestating, and our relative freedom from bank control and collusion
at the time gave us no way to compete with it.

And so on.

--
Ed Huntress