The Outthinking Investor The Price of Policy: Taxes, Tariffs, and Capital Flows
Sep 9, 2025
Douglas Holtz-Eakin, President of the American Action Forum, and Kimberly Clausing, an expert in corporate tax law, dive into how recent fiscal policies are reshaping global capital and trade flows. They discuss the surprising resilience of economic growth amidst rising tariffs and the intricate relationship between tax policies and national values. The conversation highlights the impact of corporate taxation on investments, the implications of budget deficits, and the need for reforms that prioritize economic stability and social welfare.
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Historic Tax Failures And Oddities
- Historic tax examples show taxes can have bizarre and harmful effects when misaligned with society.
- The hosts recount Egypt's early taxes, Russia's beard tax, England's window tax, and Germany's bribery deduction to illustrate unintended consequences.
Public Unawareness Masks Rising Fiscal Risks
- Persistent federal deficits have produced higher debt servicing costs and growing fiscal risk for the U.S.
- Douglas Holtz-Eakin argues the public hasn't been told deficits are a problem and credit agencies are warning of bigger risks.
Debt, Risk Premiums, And Dollar Vulnerability
- Large deficits plus reduced foreign willingness to finance them can raise the risk premium on long-term U.S. debt.
- Jeffrey Young also warns tariffs could signal a weaker long-term dollar, amplifying financial-market effects.