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Author: AOLFoolman100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 757038  
Subject: Re: Optimal Tax Policy Date: 10/16/2012 7:45 AM
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"Taxing capital income at a permanently lower rate than labor income would result in higher average long-term prosperity, relative to an alternative that generated the same amount of tax revenue by permanently taxing capital and labor income at equal rates instead."


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This makes sense. Why? Because the participation in investing and capital risk taking is far more sensitive to tax rates affecting returns than tax rates affecting participation in labour. People have to work for a source of stable income (most of the population at least). On the other hand, investing is far more discretionary and more affected by perceived risks and rewards, of which the tax rate is a significant factor.
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