According to the latest opinion polls, Americans now favour Democrats over Republicans on almost all main issues, even taxes. That sounds a touch ungenerous. Admittedly, the latest tax-cut package signed by President George W. Bush contains the usual mix of short-term fixes, relief for the wealthy and accounting gimmicks, leaving its actual costs well above the $70bn advertised.

But extending tax cuts on dividends and capital gains – the provision that has attracted most ire – is actually one of the more defensible ones. In theory, providing relief for investors should enhance the attractions of saving, boosting longer-term growth. In practice, taxing dividends paid to many investors twice caused serious distortions and arguably contributed to the excesses of the late 1990s. It increased the attractions of debt financing and provided an excuse for dubious investments, as well as for keeping excess cash on the balance sheet. If at all, companies instead tended to return cash through share buybacks, which tend to be less transparent and more erratic.