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News & Views |Archer Offers a 15 Percent Capital Gains Tax RateWednesday, July 7, 1999 OnLine The tax-cut bill that the House Ways and Means Committee will mark up next week will propose lowering the capital gains tax rate from 20 percent to 15 percent for property held for more than one year, according to a committee press release. The rate reduction would go into effect retroactive to July 1, 1999, and also would lower the capital gains tax rate for taxpayers in the 15 percent income tax bracket from 10 percent to 7.5 percent. There is no word on whether the rate reduction also applies to the corporate capital gains tax. "With 84 million Americans owning stocks and more entering the markets each day,
capital gains are no longer just for Wall Street brokers and high rollers.…Today, a
stake in America’s private sector pays for college or a more secure retirement,"
Committee Chairman Bill
Archer, R-Texas said in the release. |
The press release makes the case that a capital gains tax cut pays for itself. A Standard and Poor’s DRI study is cited in the release that claims a capital gains tax cut, by encouraging investment and raising asset values, "is perhaps the only tax cut that truly pays for itself." Opponents of capital gains tax cuts charge that they raise money in the short term by encouraging investors to sell assets to take advantage of the lower rates. However, over the long-term, the rate reductions sharply reduce the revenues collected by the Treasury, critics argue. The House Ways and Means Committee must mark up a tax bill by July 16 and tentatively has set July 14 as the date it will meet. The Senate Finance Committee plans to mark up its version by July 23. These dates are important because effective dates of tax legislation are related to
when action is taken on the bill; typically, either when the chairman’s proposal is
unveiled or when either panel votes on the legislation. |
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