Don Evans on Capital Gains & Dividends Cuts

Trenchant insight here. In part, extending the cuts for another few years (or, even better, making them permanent) will lead to stability and transparency in the market:

To plan for the future, businesses need certainty — they can’t plan if they are unsure whether this tax relief will be available down the road. When companies decide to invest for the future — to expand a plant or buy equipment or hire workers — they often do so with an eye toward a return five, 10 or 20 years later.

The benefit of making tax relief for capital gains and dividends permanent is reaped not only in additional investment in the short term but in long-term investments that firms will make if they are comfortable that that taxes on capital gains and dividends are not going to rise suddenly.