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Three Interesting Articles about an Issue Related to Money and Capital Markets, Financial Markets, Financial Instrument - Assignment Example

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Finance & Accounting
Pages 11 (2761 words)


This paper consists of the analysis of several papers: economists are rethinking the view that capital should not be taxed, stock Trading Is Still Falling After ’08 Crisis, Companies Maintain Debt Pace Amid Haven Trade. …

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Three Interesting Articles about an Issue Related to Money and Capital Markets, Financial Markets, Financial Instrument

The first article "Economists are rethinking the view that capital should not be taxed" relates to policy making. Taxation is one of the major tools of fiscal policy. The policy makers consider the canons of taxation put forth by Adam Smith but some markets are so complex that it is almost impossible to achieve all the objectives of these canons: There are trade-offs. This article probes into the usefulness of tax on capital gains. Traditionally, taxes on capital gains have been low because of the belief that higher taxes would have an impact on growth. This article provides arguments against this view and suggests that taxing capital gains is a good idea.
America’s current corporate-tax system is being blamed for the struggling economy. Currently, the tax rate on capital gains is 15% which is lower than in many countries. Since the 1970s and 1980s, many economics have believed that this tax must be made lower. Some argue that there should be no capital tax at all. Governments have to tax some part to restore equality and to fund public goods but there is an inevitable trade-off: taxes have an impact on consumption. Negative responses to taxation are harmful for the economy. Taxation has been dealing with inequalities that related to pay differences and these inequalities were addressed through taxation on labor.
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