Judd Gregg: “First, I think we have to understand what the capital gains tax cut will do. It will generate prosperity. It will…”

“First, I think we have to understand what the capital gains tax cut will do. It will generate prosperity. It will generate capital that is today locked down in investments that are not productive, take that capital, cause people to convert that capital to cash, and reinvest it in other economic activity which will create jobs, create prosperity. Every time we have reduced the capital gains rate in this country, we have seen a flow of revenues into the Federal Treasury also. So not only does it create economic activity in the community at large, and create more investment activity, and thus create more entrepreneurship, and thus create more jobs, it also creates more cash coming into the Federal Treasury. Why is that, you may ask. How can a tax cut actually generate more income? Because, very simply, the income is never realized if the money stays locked down. It never occurs unless you create the tax cut. When you create the tax cut, people have an incentive to go out and convert those capital assets--which today are just sitting there--into cash, and as a result they generate revenue, and that revenue is taxed. As a result, the Treasury gains more money.”