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Taxing Credulity

Here’s a letter to the New York Times:

Mentioning only the coming hike in the top income-tax rate from 35 percent to 39.6 percent, Christina Romer claims that “it is just not plausible” that the tax increases scheduled to kick in on January 1st “are a major source of uncertainty” keeping economic activity anemic (“It’s the Big Questions That Slow Growth,” Dec. 5).

Prof. Romer’s claim taxes credulity.  She fails to mention other tax hikes looming on New Years Day, such as the 33 percent rise (from 15 percent to 20 percent) in the top capital-gains tax rate (and the increasing complexity of the capital-gains tax schedule); the increase in the top federal estate-tax rate from 0 percent to 55 percent; and the hike in the top federal divided-tax rate from 15 percent to 39.6 percent – an increase of 164 percent!  This dividend-tax rate, by the way, is scheduled to rise again on January 1, 2013, to 43.4 percent.

And don’t forget about the hyper-frantic Fed and its spasms of “quantitative easings.”

Is it really not plausible that the uncertainty now haunting investors is the result of these looming tax hikes, combined with fear about the value of the dollar and anxiety over the still-to-be revealed actual consequences of Obamacare, Dodd-Frank, and the other incontinent interventions that have spewed forth from Washington in the past three years?

Donald J. Boudreaux