Tax incentives matter

From BusinessWeek: A Big Windfall for Small Biz, a small piece demonstrating that tax incentives matter. Lower taxes reduce the barriers for transactions and thus help captial and resources reach their highest uses.

The Bush administration's recent tax cuts are having an unintended effect: They're encouraging entrepreneurs to sell their companies. The cut in the capital-gains tax from 20% to 15% means most sellers can pocket an extra 5% of the sale price of their businesses. "I think this is going to have a huge effect,'' says Beatrice Mitchell, co-founder of investment bank Sperry, Mitchell & Co., which specializes in midsize outfits. "I've already had a couple business owners say, 'Maybe the pricing isn't quite what I wanted, but with the extra 5% I'll do it.'''