Dualing tax plans

The issue of taxes may be heating up in the Presidential race. Yesterday, Treasury Secretary Paulson teed up his proposals for corporate tax reform with a line up on mostly conservative luminaries, including Alan Greenspan (see Paulson Gets Support for Tax Overhaul – washingtonpost.com and my previous posting). The thrust of his ideas is a return to the 1986 deal of eliminating specific business tax incentives in return for a lower corporate tax rate.
On the other side, John Edwards unveiled his tax reform package that includes an increase in the capital gains tax rate (Edwards’s Tax Plan Focuses On Low, Middle-Income Families – WSJ.com, Edwards Proposes Raising Capital Gains Tax – New York Times and John Edwards for President-Building One Economy With Tax Reform To Reward Work).
Without getting into the specifics of either camp’s proposals, I would raise one very specific issue. If the I-Cubed Economy is fueled by development of intangible assets, how does your tax proposal foster or retard that development? Otherwise, you are just proposing a tax system for the past, not the future.

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