3 ms·
>"it would encourage broader investment rather than hoarding" why do you think a tax on investing would encourage investment? It would encourage not selling yo
by mattmcknight 5y ago
>"it would encourage broader investment rather than hoarding"
why do you think a tax on investing would encourage investment? It would encourage not selling your investments, or investing in investments which don't produce capital gains, which tends to look like hoarding.
- clairity 5y agoinvestment happens when you have positive-npv projects to invest in, regardless of tax rate (and a smooth, even tax squeezes out distortions that might otherwise redirect investment into unproductive assets). a tax might affect investments at the margin, but not in an environment where there is excess capital looking for return (e.g., the current stock market).
- mattmcknight 5y agoIt still seems like a higher capital gains tax will discourage some investment in things, to the extent the NPV changes versus other investments that don't incur that tax.
- clairity 5y agoyah, that’s the investment at the margin, but that’s currently overwhelmed by excess capital looking for any returns, even net negative, as long as it’s less negative than the next best alternative. excess capital decouples the risk-reward relationship. that’s why it makes the most economic sense to tax it back into line (and not other things), leaving money in the hands of spenders & more constrained investors to direct the market back to productivity, rather than extraction (for no good economic reason).