My Op-Ed in Saturday's Wall Street Journal on the Importance of Making Dividend and Capital Gains Tax Cuts Permanent

My Op-Ed in Saturday's Wall Street Journal on the Importance of Making Dividend and Capital Gains Tax Cuts Permanent

January 23, 2006

I wrote an op-ed, Capital Offense, which ran in the Saturday (1/21) Weekend Edition of the Wall Street Journal. You can read the article by clicking on the link, above.

In early February, the Senate and House will meet in Conference to hammer out the details of the tax bill. My spies on the Hill tell me Congress is likely to extend current dividend and capital gains tax rates for 2 additional years until 2010. Better would be to make both tax rates permanently zero.

This op-ed explains how dividend and capital gains tax rates impact equity values and corporate capital structure decisions. There is intense global competition for capital today. China and India realize that attracting US capital is a key to their high growth rates. This is especially true for advanced communications technology–the only way to keep growing without using more oil.

The US needs to understand that we are not competing for jobs. We are competing for capital. Making the tax rate cuts permament will help keep capital in America where it can support higher productivity and paychecks.

JR

John Rutledge

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