The US tax cuts proposed by Obama are something of a mixed bag. I can’t readily decipher what it all means based merely on a quick glance at their website. It does seem to entail a lot of tax credits (ie handouts) rather than real reduction in tax rates. Tax credits are a demand side initiative and don’t generally do anything to change incentives or reduce trade barriers. However amoungst it all there are some good initiatives. Abolishing capital gains tax on small businesses will be good for the capitalists that drive innovation and will provide incentive for innovation. This is similar to the John Howard initiative in Australia where the small businesses held for more than 15 years was made exempt from capital gains tax.
What do others make of the Obama tax cuts?