Patient Capital II Jude Wanniski July 30, 1997

Memo To: Majority Staff of House Ways & Means and Senate Finance Committees
From: Jude Wanniski
Re: 18-month holding period

This is the worst thing I’ve seen in the package, because it is a dead-weight loss to the economy and a serious blow to the efficiency of our stock markets. It is a tax without revenue, a needless regulation that adds enormous costs to the markets and mountains of work in recordkeeping for lawyers and accountants. How could this possibly have happened? There has never been an 18-month holding period on capgains in the history of the tax system!!! Yesterday I sent a memo of thanks to Archer for having resisted a call for an 18-month holding period by the nitwits at Treasury. It explains why a 12-month holding period is stupid to begin with and why a zero holding period is the only one that makes any sense. Where does the idea come from? From the big corporate mentality that thinks the government will hold up the value of the market, and their shares, by forcing people to hold assets longer. All it does is discourage people from entering the market, or promote the hiring of experts to work around the regulation. The biggest burden is on the little companies. For the GOP conferees to accept this punishment now in exchange for a useless 18% rate that will not take effect until the year 2006 is palpable evidence of incompetence -- unless like Rep. Tom DeLay’s defense in taking part in the failed coup against Newt, the guys at the top were simply exhausted. This is Bob Rubin’s final revenge!