Market Correction

23 January 2008

The Editor, New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

Len Burman argues that repealing the Bush tax cuts two years early, in 2009, will stave off recession ("Make the Tax Cuts Work," January 23). He reasons that "If people knew that their tax rates were going up next year, they'd work to make sure that more of their income is taxed at this year's lower rates." And investors would "cash out their capital gains now to avoid paying higher taxes later."

If Mr. Burman's economics are correct, his proposals are far too modest. Why not propose that Uncle Sam announce that in 2009 he will raise income-tax rates to 100 percent and confiscate all investment property? Think of the enormous outpouring of work that will result in 2008! And because looming confiscation in 2009 will cause the cashing out of ALL investments in 2008, the resulting economic stimulus would dwarf that which would follow from a mere cutting of capital-gains taxes.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University