Mr. Sokoll,



Thanks for your comments. Let me make a couple of points. The most fundamental concept in economics is how value is established by supply and demand. The law of supply and demand applies to the factors of production as well as goods and services for final sale. Increase the after-tax cost of capital will cause fewer investment projects to be undertaken. My gripe is that many economists ignore that axiom in their quest to justify equity-based tax proposals. And yes, I don't believe in the utility of empirical studies such as the ones cited in the article to direct policy that is at odds with fundamental economic theory. To be sure, you can point to the tremendous benefit for certain business of being located in Silicon Valley or lower Manhattan in spite of being subject to high marginal tax rates, but the business owner contemplating the risks and rewards of a new investment is going to take into account the after tax return in spite of what Mr. Buffett thinks.