For those who can face spending a little more time on the British elections, this piece by Tim Montgomerie is a must-read.
In the meantime, it’s disturbing to see that one of the first moves agreed to by the new Lib-Con coalition partners is an increase in capital-gains tax. Deficits cannot be wished away, of course, and, as valuable as a supply-side tack can be in helping restore order to the public finances, part of the fix will inevitably (and regrettably) have to include higher taxes (preferably weighted towards consumption). What should not be done, however, is anything that decreases the incentive to save. On both sides of the Atlantic, there is an urgent need to return to a culture of saving. Increasing the tax on capital gains (particularly when those capital gains are unindexed for inflation) sends exactly the wrong message – and I’d be skeptical about how much money it will actually raise over the longer term. Not an encouraging development.