Holy Stimulus, Batman!

Rep. John Campbell, a Republican representing California's 48th District, is introducing his own stimulus proposal. His idea, or rather, the idea of one of his constituents, is a Capital Gains Tax Holiday for 2009. Under his plan, any assets that are bought in 2009 would be free from capital gains tax when they are sold at some time in the future.

There is much to commend this proposal. First, it specifically targets stimulus, not just by having the government writing a check, but by encouraging the private sector to start making transactions. It also doesn't cost us a dime right now. In fact, as Rep. Campbell points out in this interview on CNBC, it is possible that tax revenues in fiscal 2009 would increase due to this proposal, because those selling assets may end up incurring taxes on their capital gains. Another advantage is that any cost that may be incurred by this would be spread out over an untold number of years. There wouldn't be a large hit to any single fiscal year like the trillion dollars plus that we are borrowing to stimulate the economy now.

It should be pointed out that this is the sort of action that the Congress should be looking to implement. This proposal stands on its own, and doesn't rely on being part of a larger omnibus bill in order to ensure passage. Think about the "stimulus" package that just passed. If it was voted on, line item by line item, how many of the line items would pass? And, of those that would pass, how many of them could demonstrate any amount of stimulus over and above the mere fact that the money supply was being increased?

This proposal by Rep. Campbell may not have legs. I certainly will not be holding my breath for its passage. He should be commended, however, for proposing an innovative idea that has a chance to be stimulative without increasing our current debt obligations.