A Quote by James Grant
To suppose that the value of a common stock is determined purely by a corporation's earnings discounted by the relevant interest rates and adjusted for the marginal tax rate is to forget that people have burned witches, gone to war on a whim, risen to the defense of Joseph Stalin and believed Orson Welles when he told them over the radio that the Martians had landed.
Related Quotes
If top marginal income tax rates are set too high, they discourage productive economic activity. In the limit, a top marginal income tax rate of 100 percent would mean that taxpayers would gain nothing from working harder or investing more. In contrast, a higher top marginal rate on consumption would actually encourage savings and investment. A top marginal consumption tax rate of 100 percent would simply mean that if a wealthy family spent an extra dollar, it would also owe an additional dollar of tax.
Well, I think the reality is that as you study - when President Kennedy cut marginal tax rates, when Ronald Reagan cut marginal tax rates, when President Bush imposed those tax cuts, they actually generated economic growth. They expanded the economy. They expand tax revenues.
I forget what the relevant American rate is, but I can tell you that our goal is to have a combined federal-provincial corporate tax rate of no more than 25 percent. We're on target to do that by 2012. We will have significantly - by a significant margin the lowest corporate tax rates in the G-7, and that's our - our government's objective.
The key is if the economic data stays soft, maybe we don't have to worry much about interest rates anymore. Then we need to worry about earnings. What gave us a really strong move in stock prices from late May until about two weeks ago was this heightened optimism that maybe interest rates are at that high. That gave you a relief rally. Now reality is setting in - if we've seen the worst on interest rates then we've seen the best on earnings.
The real challenge was to model all the interest rates simultaneously, so you could value something that depended not only on the three-month interest rate, but on other interest rates as well.
The underlying strategy of the Fed is to tell people, "Do you want your money to lose value in the bank, or do you want to put it in the stock market?" They're trying to push money into the stock market, into hedge funds, to temporarily bid up prices. Then, all of a sudden, the Fed can raise interest rates, let the stock market prices collapse and the people will lose even more in the stock market than they would have by the negative interest rates in the bank. So it's a pro-Wall Street financial engineering gimmick.
A higher IOER rate encourages banks to raise the interest rates they charge, putting upward pressure on market interest rates regardless of the level of reserves in the banking sector. While adjusting the IOER rate is an effective way to move market interest rates when reserves are plentiful, federal funds have generally traded below this rate.
Corporate tax reform is nice in theory but tough in practice. It most likely requires lower tax rates and the closing of loopholes, which many companies are sure to fight. And whatever new, lower tax rate is determined, there will probably be another country willing to lower its rate further, creating a sad race to zero.
Like so many people, I only remembered Orson Welles as this huge, fat, bearded figure selling wine in TV commercials. So whenever anyone said I looked like Orson Welles I said that I wasn't that fat, and I would get on a diet, quickly.
Like so many people, I only remembered Orson Welles as this huge, fat, bearded figure selling wine in TV commercials. So whenever anyone said I looked like Orson Welles I said that I wasnt that fat, and I would get on a diet, quickly.
Let's take the nine states that have no income tax and compare them with the nine states with the highest income tax rates in the nation. If you look at the economic metrics over the last decade for both groups, the zero-income-tax-rate states outperform the highest-income-tax-rate states by a fairly sizable amount.
I wanted to meet Orson Welles. So I was like, whatever, somehow get me in on this. I'm able to get cast in it, but Orson Welles worked alone. He worked before all of us worked. He didn't want to work with anyone else.
The insurance companies do not refer to the key policy rate when they send their statements. We can only control that rate. Long-term interest rates are determined largely by global financial markets.
We need to consider a financial transactions tax. And we need to ask whether the top marginal tax rates are really appropriate, given that the effective tax rates paid by the wealthy are often actually lower than those paid by the rest of us.
It's one of the fundamental principles of the stock market: When interest rates go up, stocks go down. And along with financial companies and cyclicals, technology companies - with their sky-high price-to-earnings multiples - should be among the biggest losers in an environment of rising rates.
I think, in effect, in most of the European countries, the total marginal tax rate is over 50 percent; that's to say, add on other taxes like VAT to the income tax.
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