Bill Gross Backs Higher Taxes

http://www.futureofcapitalism.com/2009/06/bill-gross-backs-higher-taxes

Pimco's William Gross, in his June market commentary, offers his take on the ideal marginal tax rate:

supply-side economics was a partial con job from the get-go. Granted, from the 80% marginal tax rate that existed in the U.S. and the U.K. into the late 60s and 70s, lower taxes do incentivize productive investment and entrepreneurial risk-taking. But below 40% or so, it just pads the pockets of the rich and destabilizes the country's financial balance sheet.

If Mr. Gross really thinks that there is no difference in incentives packed into the 15 percentage point difference between a marginal tax rate of 40% "or so" and, say, 25%, he has the option of cutting the fees he charges PIMCO customers by that margin, or of cutting his own compensation and those of his key deputies by that amount. But given the difficulty of defining "rich," it seems a bit cavalier to complain about tax cuts just padding "the pockets of the rich." The alternative to leaving the money in the pockets of the rich to save, spend, or invest is giving it to the politicians in Washington to spend or redistribute, and there's mixed evidence on how productive or entrepreneurial that activity will be.

by Editor  |  Jun 8, 2009 at 5:06 pm Related Topics:  Definition of 'Rich' receive the latest by email: subscribe to the free futureofcapitalism.com mailing list