Adminstration Would Be Well Advised to Listen to Thomas

President George W. Bush seems determined to stick to his plan to eliminate individual taxes on corporate dividends -- even if it means he passes on a broader, simpler tax cut that could do more for the economy. It is unclear whether this position is simple stubbornness or an inability to grasp the big picture, but the White House is misplaying its hand.

House Republicans are gathering around a plan to cut the tax on both dividends (currently taxed at individual tax rates as high as 38 percent as ordinary income) and capital gains (currently with a top rate of 20 percent) at a new, lower 15 percent rate. Lower-income taxpayers who now pay 10 percent cap gains taxes would see that halved to 5 percent.

Cutting the capital gains tax should give a jolt to all businesses, not just those who pay out dividends. And unlike plans to phase in the president's dividend cut, a simple cut in the marginal rate is much easier to implement and comply with, requiring no army of accountants to figure out.

In all, a cut in the capital gains rate would appear to be easier play for the White House, so much so that current opposition to it may just be so much posturing.