Federal Reserve debunks myths about capital-gains tax cut

Pretty high on the right-wing wish list is the permanent extension of Wienerboy's cuts in the capital-gains and dividends tax. The spin is that this will drive up stock prices, reward investors and thereby indirectly benefit the little guy, who might have cause to wonder about a $162 billion tax cut that increases the relative tax burden on the middle class while delivering 80% of its benefits to those making more than $200,000.

It's a nice scenario, with one single flaw: it's not true.

The Federal Reserve, still ruled by Bush shill and Chicago School lab rat Alan Greenspan, just released a study that shows clearly that these cuts have not done anything to promote investment or raise stock prices. It's pretty simple: first, the U.S. and European stock markets have risen and fallenlargely in lockstep - despite the fact that investors in European stocks do not receive the subsidy of this tax cut - and that the various stock indices haven't really risen all that much - the DJIA going from 10,600 when the cuts came into effect in March 2002 to a staggering 10,900 now. That's an annual rise of about 1%, which is significantly below both the average of the Clinton years and indeed the multi-decade average. The other indices, S&P 500 and Nasdaq, did worse.

$162 billion dollars is a pretty high price tag for a policy that doesn't work, no?