Man Without Qualities

Sunday, January 19, 2003

Milton Sez

To be exact, he says this about the proposed tax cuts:

Eliminating double taxation of corporate earnings will end the present bias toward debt rather than equity in the financial structure of corporations as well as the present bias toward retaining earnings rather than distributing them as dividends. The combined result will be a more effective distribution of capital, and will promote a more effective market for corporate control.

And he's exactly right, in my view.

Professor Friedman is agnostic on the short term stimulative effect of the tax cut. But, the long run stimulative effects (that is, growth and efficiency) are a very good bet. And the more long term growth there is, the more there is to fund long term commitments such as social security. In fact, more long term growth is the only realistic way to fund social security at anything like the rates now contemplated by law.

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