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Experts Agree That Capital Gains Tax Cuts Lose Revenue
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Apr 25, 2008 11:08am |
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| Category | Analysis |
| News Date | Friday, April 18, 2008 05:00:00 PM UTC0:0 |
| Description | During Wednesday’s Democratic presidential debate, Charles Gibson of ABC News made the following statements about capital gains taxes:
● “Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent and George Bush has taken it down to 15 percent and in each instance when the rate dropped, revenues from the tax increased. The government took in more money.”
● “So why raise it [the capital gains rate] at all, especially given the fact that 100 million people in this country own stock and would be affected.”
These statements, echoed in a Wall Street Journal editorial today, are seriously misleading, as explained below.
Cutting capital gains rates reduces revenues over the long run. That’s the conclusion of the federal government’s official revenue-estimating agencies, as well as outside experts and the Bush Administration’s own Treasury Department.
● The non-partisan Congressional Budget Office (CBO) and the Joint Committee on Taxation have estimated that extending the capital gains tax cut enacted in 2003 would cost $100 billion over the next decade. The Administration’s Office of Management and Budget included a similar estimate in the President’s budget.
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While a capital gains tax cut can lead investors to rush to “cash in” their capital gains when the lower rate first takes effect, it does not raise revenue over the long run. |
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