Wednesday, December 10, 2008

A Democrat I agree with

Jared Polis, a Democrat from Colorado (and the first member of the House elected as a freshman after running as an openly gay man) has some refreshing words about the auto bailout in today's Wall Street Journal:

If we as a society place a public premium on "saving" the automobile industry from its default reorganization under Chapter 7 or Chapter 11 bankruptcy -- which has been good enough for the steel and airline industries, among others -- then a better manner in which to express that premium might be to establish special tax consideration for those who are willing to take on the risk. One way of doing that is to provide an exemption from capital-gains taxation on all debt or equity instruments used in the next six months to invest in the troubled auto makers.

By waiving the future capital-gains tax on all investments in the automobile industry, we enhance the projected return models and therefore the likely occurrence of a privately funded "bailout." There are turnaround firms and funds, and they are experts at what needs to be done. Tax exemption for gains would certainly get their attention. It also wouldn't cost taxpayers anything because it only forgoes future government revenues that wouldn't exist absent this incentive.
And a line that I love:

At the very least, my constituents in Colorado won't find themselves as limited partners in a private equity fund run by Congress making speculative investments
in flagging automobile manufacturers and who knows what else with their taxpayer money.
Too bad Jared doesn't start until next year, and likely will be too late to vote on this bailout mess.

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