Earlier this week, Matt Yglesias cited Josh Barro’s latest RealClearMarkets column on the case for indexing capital gains taxes. I think Josh makes a rock-solid case on the merits:

Aside from distorting people’s preferences about the inflation rate, non-indexed capital gains taxes are economically inefficient. We tax income in an effort to finance the government in accordance with ability to pay. But when you tax wealth instead of income, you create incentives for people to consume instead of invest. And if you were going to have a wealth tax (France has an explicit one) there is no plausible reason to link the tax rate to the inflation rate, as our system implicitly does.

But Josh also argues that indexation would weaken political resistance to a policy of embracing moderate inflation as a way to ease the process of private deleveraging, thus giving the economy a much-needed boost. And this is where Matt made an argument that caught my eye:

Barro deploys this to try to get people like me to back CPI-indexation of capital gains taxes. Another point to make would simply be that the domination of policymaking by the interests and predilections of rich people is dangerous.

I’d add that there’s more to this than the domination of policymaking by the interests and predilections of rich people. My guess is that even impecunious people with long time horizons have a disproportionate impact on public policy, and that this will always be the case. It takes time and attention to follow the political fray, to vote, to volunteer, and to make campaign contributions. As someone with a fairly limited attention span, I recognize that I will not have the same political influence as some of my more methodical, committed neighbors. Savers overlap with the class of people who are likely to be engaged with public life. And of course savers overlap with the class of people who are rich, though of course the correspondence is not one-to-one.

Given that the impetuous and short-sighted — my people — represent a large slice of the population, the logic of democratic responsiveness suggests that we deserve more influence in public life. But the state of our public finances suggests to me that we might have our fair share.

This isn’t to say that that our public policies give due regard to the interests of less affluent non-savers. But it could be that the policies backed by savers would ultimately be more beneficial to less affluent non-savers, even if less affluent non-savers disagree with their prescriptions in the short term.