Don’t Count the Small Investor Out

Robert Eisner’s commentary “A Reduction in the Capital Gains Tax Would Benefit Relatively Few” (Times Board of Advisors, June 30) is the same argument that was used by the minority in debates about the 1954 tax law, when they claimed that only 8% of the people would benefit from a $200 exemption for dividends received by individuals. Imagine tax laws that motivated only 8% of the country’s people to invest in the future of their country.

What the minority didn’t realize in 1954 was that millions of little people would be motivated to invest, causing a significant increase in the total capital stock of the country, which led to the greatest 15-year period of economic growth in the last 50 years.

Eisner’s position that the lowering of the cost of capital “would hardly be great” is absolutely wrong, and economic history will prove him to be wrong. His idea that “a good principle of taxation is to tax all true income alike, regardless of its source” is also wrong. He doesn’t understand that tax laws can be fundamental to creating a positive investment climate for individuals, so that millions of little people can be given the opportunity to be rich, not poor, through investment.

WILLIAM F. BALLHAUS

Los Angeles