Sunday, September 7, 2008

Where Obama Agrees with Bush: Dividend Tax

In a previous post I criticized Obama's tax plan due to the way its income tax treatment creates bad economic incentives.

Obama's plan fares much better however when it comes to the treatment of the dividend tax, as explained by Mankiw in this NYT article.

According to Mankiw, even if McCain’s dividend tax proposal is in principle better than Obama's, Obama would ironically have a better chance than McCain at preserving one of the most positive achievements of the Bush presidency: the reduction of the dividend tax rate.

Obama could do even better however and beat McCain on his own turf by proposing the total elimination of this distortionary and nonsensical tax.

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