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This is the kind of flip-flop I like

I didn't have time to properly celebrate it last week, but the Senate voted down an attempt by Ted Kennedy to reverse Bush's cuts on dividends and capital gains taxes. Yay.

But the Wall Street Journal notes an interesting reversal of opinion on the issue.

...the most intriguing vote on behalf of the tax cut this week was cast by Arizona's John McCain. He and two other Republicans opposed these same tax-rate cuts in 2003 on grounds that they added to the budget deficit. His opposition meant that Vice President Dick Cheney had to break a 50-50 tie to pass the lower rates. Those cuts have since helped lift business investment and thus the entire economy, including a gusher of new federal revenues in the last 15 months or so.

Asked to explain his reversal, Mr. McCain said, "American businesses and investors need a stable and predictable tax policy to continue contributing to the growth of the economy." And with "the leveling of some key economic indicators such as real GDP growth," he said he doesn't think we should "reverse course by letting the higher tax rates take effect." Our guess is that Mr. McCain may also be looking ahead to the 2008 GOP Presidential primaries, which won't be kind to candidates who've voted for tax increases. Whatever his calculation, we'll take it -- and so will the economy.

So is McCain shoring up his conservative bona fides in anticipation of a 2008 White House bid? Of course. But I think it's also likely that he's seen the wisdom of the cuts, and recognizes the folly in reversing them now. Either way, I find it encouraging.


It's got to be hard for ANYONE not to see the benefits of making those cuts permanent.

The 2005 revenues show that Cap Gains tax revenues are UP (not that more revenues is necessarily a good thing, from my standpoint), way up, over projections based on the old Cap Gains rates. It shows that lower tax rates generate MORE tax revenues as fewer people defer income.

Of course, as a result, the widely misunderstood "personal savings rate" is way down, though that doesn't include pension contributions and investment in other financial vehicles like 457s & 401Ks, as they are logged as "purchases of financial implements" NOT as savings.

I'd ultimately like to see tax cuts deep enough to actually cut revenues and force major governmental restructuring...I'd especially like to see a tax system that made EVERYBODY pay! A system like the "Fair Tax" (a NRST) that excludes the first $20,000 of earned income andexcludes medicines and some basic food stuffs (to help the truly needy) and most of all would force EVERYONE, even those who don't generate the bulki of their wealth through income (the truly "rich") to pay towards the upkeep and maintanace of government.

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