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View Diary: The Lie Behind Capital Gains Tax Rates (41 comments)

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  •  Hmm... (4+ / 0-)
    Recommended by:
    elwior, ccyd, AuroraDawn, Sandino
    ...your distinction between primary and secondary markets misses that capital formation in the former may well be contingent on the latter.  make the secondary markets disadvantaged, and it'll be more expensive to raise capital I. the primary markets...
    This is, of course, the argument that Wall Street apologists usually raise but I find it so dubious, I don't usually bother to mention it.

    Think about it.  The ultimate goal is to put money into the hands of firm managers established publicly-held corporations who need it for investments.  

    Why they would be willing to sell equity if they can borrow cheaply is one good question, but that is the method one must prefer for some reason in order to justify a capital gains tax cut (as a preferred method of facilitating investment).

    It would be cheaper for the federal government if it were to simply set up it's own taxpayer-financed investment bank that would pump money into the corporate community directly through its participation in underwriting initiatives.

    Instead of rewarding an entire class of wealthy speculators for providing the ultimate source of profit for underwriters.

    Is that really the goal?  To make Investment bankers as profitable as we possibly can, just so they'll have more money to risk on companies that want to go public?

    We really need to stop 'helping' the private sector with such stupid ideas.

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