Published Opeds on Financial Reform: December 2010 Archives
Regulating Wall Street Co-Editor Viral Acharya is interviewed by Mint on regulatory reforms and the policy challenges India faces, from the sidelines of the Emerging Markets Finance conference organized by the Indira Gandhi Institute of Development Research (IGIDR) in Mumbai.
Watch the interview on LiveMint.com
Regulating Wall Street Co-Editor Thomas Cooley appeared on the FOX Business channel, arguing that lowering tax rates permanently on capital income would promote economic growth.
Watch Professor Cooley's interview on FOXBusiness.com.
by Thomas F. Cooley and Lee E. Ohanian
The Obama administration has announced its willingness to compromise on a temporary extension of the Bush tax cuts for all income levels. But the Bush tax cuts never went far enough in providing sufficient incentives to promote higher rates of savings and investment. Temporary solutions like this one or the administration's proposed investment tax credit for businesses will not solve our problem of low capital accumulation. What matters is how the income from capital is taxed over its lifetime.
Economists agree that a large capital stock is a key ingredient for prosperity, as it expands our productive capacity and raises worker productivity, which in turn increases wages and consumer purchasing power. Our capital stock is comparatively much smaller today than it was before the Great Depression. The ratio of business-sector capital to output is about 30% smaller today than it was in 1929. This shortfall reflects the fact that recent investment rates have been lower and consumption rates have been higher compared to earlier in our history.
Read the full opinion editorial on WSJ.com.