301. Tax Cuts and Investment Incentives.
- Author
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Blinder, Alan S.
- Subjects
SAVINGS ,TAX cuts ,TAXATION ,PRICE inflation ,RATES ,TAX incentives - Abstract
This article discusses the issues of raising investment incentives by means of tax cuts on large scale. The author states that decisions over the magnitude and nature of business tax cuts ought to be divorced from current short run stabilization policy. Such tax cuts should not be considered as short run palliatives for either current inflation problem or coming unemployment problem in the United States. The author presents a brief exercise of Congressional control over tax rates. It would be disingenuous not to point out that indexing the corporate and personal income tax codes would almost certainly amount to a tremendous reduction in the taxation of income from capital. High inflation rates have earned the rates of taxation on dividends, interest, and profits. Thus a decision by Congress to reassert its constitutional authority to set tax rates by indexing the tax code would probably also be a decision to cut taxes on capital quite drastically. The author concludes that of the many ways now being considered to provide additional tax incentives for saving and investment, index tagging the tax code probably scores most highly both on grounds of equity and on grounds of efficiency.
- Published
- 1980
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