West Wing Airing: Tax Cut a Good Thing

This approach would increase equity values by 10% initially, with the potential for another 10% to 20% down the road as companies adapt to the new tax rates. The plan would add $1 trillion to $3 trillion to net worth initially. It would make capital available to companies to buy new tools and equipment to make workers more productive.

Worker Benefits

The dividend tax cut is a Main Street policy, and it will work by increasing the capital stock, which will raise productivity and real incomes. The benefits will be enjoyed by working people, not coupon-clippers, both by increasing the value of their pension funds and by increasing their incomes.

U.S. workers have the highest productivity in the world. They're productive because they have the best training and the most modern tools. The dividend tax cut will bring more tools to workers to create more high-paying jobs, just as the 1981 tax cuts did.

The increased dividend payments will exert powerful discipline on managers, will help to restore proper governance to businesses and improve confidence among investors.

The revenue lost to the government totals about $30 billion a year, even before thinking about any new tax revenue that would accompany growing incomes and higher capital gains. This number isn't material to our $10 trillion-plus economy, still less so for our $100 trillion-plus asset markets. It would have no measurable impact on interest rates. But the benefits of the tax cut will be enormous.

We have a once-in-a-generation opportunity to correct such a destructive element of the tax system. We can't afford to miss this opportunity. We must end the double-tax on dividends now.