Word: reals
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Dates: during 1980-1989
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...even talk about fairness. Almost no one disputes that most of the benefit of the proposed tax break for capital gains -- profits from the sale of investment assets such as stocks and real estate -- would go to people with incomes of more than $200,000 a year, or that the average person in that pleasant category would save $25,000 a year in taxes. The dispute is whether this break (which has passed the House and is currently stalled in the Senate) would be so good for the economy that we would all prosper from it, making resistance on fairness...
...ideal free-market tax system would be no taxes at all. Taxes discourage productive activity: working, saving, investing. Even President Bush, though, seems to recognize that we can't borrow the entire federal budget. So taxes are necessary. In real life, the ideal free-market tax system is one where taxes affect people's economic decisions as little as possible. That is, a tax system that leaves the world looking as much as possible like one with no taxes...
...current tax system discriminates against capital gains in one way: it ignores inflation. If a stock has doubled during a time when the general price level has also doubled, the real profit is zero, but you'll pay a capital- gains tax anyway when you sell. Of course, the same is true of interest -- an 8% return on a money-market fund at a time of 5% inflation is really only 3% -- but no one is proposing to do anything about that. Furthermore, no one is proposing to limit the deduction for interest paid. In a world with no taxes...
...other factor makes capital gains different from other forms of income: you can generally choose when to take them. In a world with no taxes, an investor would trade one investment for another whenever he or she thought the new one would be more profitable. In the real world, people hold on to investments they would otherwise trade in order to avoid paying the tax. That makes the economy less efficient. A tax break for capital gains would reduce this so-called lock-in effect. (Although, please note, this is exactly the opposite of one argument usually heard...
This is not the picture of the crack epidemic portrayed by the nightly news. On TV, crack addicts are almost invariably blacks and Hispanics from the ghetto. In real life, the problem is much broader: the number of white middle- and upper-class crack users may equal -- or even exceed -- the total from poor minority communities. No government studies break down crack use by economic status, but William Hopkins, a leading narcotics expert working for the state of New York, estimates that 70% of New York City's drug users are affluent. Across the U.S., drug counselors report rising numbers...