Byline: THE WASHINGTON TIMES
In response to "Tax relief now" (Editorial, Thursday): I used to think it was unfair to tax unearned income (capital gains, dividends) differently from earned income. However, after 30 years of accumulating retirement savings in the capital markets, I no longer see it that way. The risk is real, severe and unrelenting, and anyone who can stay the course deserves to be compensated for it. In Congress' world, all gains are the same, undeserved and obtained without pain, and losses are never acknowledged. This is bunk, of course.
In the past 50 years, economists have made minimal strides toward understanding the capital markets. Modern portfolio theory (MPT), the capital asset pricing model (CAPM) and even the Black-Scholes option valuation model, although widely taught and sold, are also widely acknowledged to be inaccurate in the extreme. Sometimes this even has humorous consequences. Congress mandates that stock options should be valued for tax purposes, but there is no way to value the options. …