Tax Reform as a Spur to Savings, Investment and Jobs

Published in Wall Street Journal

Dear Editor,

When President Carter was facing a bad economy, high unemployment and broad unrest among the electorate, one of his solutions was to raise taxes on capital gains to “soak the rich.” What he didn’t count on was a backlash from both parties in Congress which understood the Main Street benefits of lower rates on savings and investment in jumpstarting the economy.

Conditions are so similar today that I predict the House GOP will be, as Mr. Moore notes, “cracking some egg” for the economic omelet before Christmas.

What should they do? Ending special-interest tax breaks is a no-brainer, but Congress must recognize that savings and investment are not “special interests.” Most of our global competitors place little or no tax on capital gains and dividends.

Congress should also look beyond simply reforming tax rates (flat or progressive) and look at expanding the base or what we tax in the first place, without discouraging saving and investment.

Mark Bloomfield
President and CEO
American Council for Capital Formation