As the financial crisis is hurting the economy very badly, many economists are still looking for both the causes of the crisis and the solutions to it. One analysis on the cause of the crisis is pointing to former President Bill Clinton’s tax break proposal in 1996, which was approved by Congress on the following year. Some observers said Clinton’s tax cut measure, which removes taxes on capital gains when selling houses, may have been one of the causes o the housing bubble that occurred. However, many economists said the tax cut law has little effect in the housing boom and in the current crisis. There are many other factors that had contributed more on the crisis rather than the tax break. Indeed, the tax break is not the cause of the crisis but rather the easing of the credit standards, a sharp reduction in the interest rates and the unanimous belief that house costs will not drop.

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Posted by Jones on January 9th, 2009 :: Filed under Uncategorized
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