Maine Republican: "Screw the Stock Market"

Larry Kudlow has the skinny on how the Republicans are doing an end-run around RINO Lady, Olympia Snowe, on the extension of tax cuts for dividends and capital gains. Good thing. It is amazing the lack of understanding (colloquially known as "stupidity") of the particulars and nuances of tax policy in our Great Sausage Factory. There is a disturbing tendency to see tax policy in black and white terms, either cuts or hikes without any distinction of the relative incentive power of particular tax policies. This is a clumsy view and it results in bad decision-making in the ole' factory. There are all sorts of taxes and tax mechanisms at work in our overall tax policy and all taxes are not created equal, and each one has unique incentive effects. The dividend and capital gains tax cuts had the direct, automatic, and indisputable effect of raising the value of financial assets by reducing the after-tax cost of capital. For the slower readers let me restate this in another way: "these tax cuts made the stock market go UP." These particular tax cuts, however, are set to expire in 2008, which will raise the after-tax cost of capital. Again, it simpler terms..."if these tax cuts are allowed to expire...the stock market will go DOWN." Very simple, UP or DOWN. It is that basic, cut and dried, whatever. Expired div and cap gain tax cuts = stock market decline. Olympia Snowe (and obviously all the Dems who vote likewise) want the stock market to go down. Every pension plan, every retirement account, every 529 college savings account...DOWN!!! Even the State of Maine's Public Employee Retirement Plan (MALPERS ??)...DOWN!!! Olympia Snowe's policy, as a Republican on the Senate Finance Committee, is that stocks should go down. Unbelievable. If the end-run that Larry refers to is unsuccessful, sell your stocks.