Letter: Read truth about federal budget, tax cuts

Sunday, Jan. 8, 2006 | 8:14 a.m.

Possibly Bill Cramer's "grasp of cause and effect" in his Jan. 2 letter is not as erudite as he suggests. After many years at a higher tax rate, having a first year reduction in the rate of tax on capital gains would give rise to rational investors seeking to take advantage of their new opportunity.

Having taken their accumulated capital gains, is it any surprise that in the following year, whether rates remain low or are increased, revenue on the now lower, realized level of capital gains would drop? The truth: Higher rates, over time, will increase revenue subject to only one condition, i.e., should the GOP prevail with the abolishment of the estate tax then the wealthy could defer taxes forever.

Another truth: You can't balance the current federal budget with spending cuts, even if all the congressional pork and spending for the poor is eliminated. You must increase revenues.

If Mr. Cramer wants us all to bear the burden equally, rather than having those best able to pay accepting a larger share, he then would have a true grasp of cause and effect. It is unfortunate that even the Democrats are unable to grasp this cause and effect.

Douglas Thornsjo

Henderson