Letters to the editor: Sept. 10

A recent InvestmentNews survey of financial advisers (Aug. 13) showed that 63% said that they think a victory by the GOP presidential candidate, former Massachusetts Gov. Mitt Romney, would be good for the investment advice industry.

I assume they think that lower individual, corporate and capital gains tax rates would be good for the economy, stock prices and, therefore, business.

To quote the late Sen. Daniel Patrick Moynihan (D-N.Y.): “Everyone is entitled to his own opinion, but not his own facts.”

According to a study by Peter Diamond, an economics professor at the Massachusetts Institute of Technology, “Higher individual tax rates do not impede economic growth, except at the margin, 50% or higher.”

In fact, between 1950 and 1980, with a top marginal rate of 70%, real economic growth, as measured by the gross domestic product, grew at a substantially faster rate than after 1980.

Under President Bill Clinton, individual tax rates and capital gains rates were higher, but the stock market and economy flourished.

If lower individual and capital gains tax rates produce economic benefits, why did the economy and stock market stagnate for eight years under President George W. Bush, who lowered those rates?

Many claim that U.S. companies can’t compete with high corporate taxes relative to the rest of the world.

Although the stated rate is 35%, many Fortune 500 companies pay an average rate closer to 15%. General Electric Co., despite billions in profit, has paid no corporate tax over the past couple of years.

Finally, the decision for a corporation or individual to make an investment is a simple capital-bud-geting problem, which is taught in business school. Reducing the capital gains rate to zero wouldn’t make a bad investment viable.

In any event, current individual and capital gains tax rates are close to historic lows.

Barry Rabinowitz

Principal

BER Financial Group LLC

Plantation, Fla.

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