October 12, 2001 12:25 PM | Permalink |
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House Republicans continue to push for a reduction in income taxes on capital gains. The latest proposal, from Ways and Means Committee Chairman Bill Thomas (R-Calif.), would cut the top capital gains rate from the current 20 percent to 18 percent. (1)
A distributional analysis of the Thomas proposal finds:
- More than 70 percent of the proposed tax cuts would go to the best-off one percent of all taxpayers. The average tax cut for these taxpayers would be $5,356 in 2002.
- Ninety-three percent of the tax cuts would go to the top 10 percent.
- In contrast, for the bottom 80 percent of taxpayers, the capital gains tax reduction would be worth virtually nothing.
According to stock broker Charles Schwab, who is lobbying for a capital gains tax cut, the current 20 percent capital gains tax rate has led to “stock prices that [are] too high”—implying that a lower capital gains tax rate would depress the stock market. (2)
“Our country is in the middle of a war against terrorism, our economy is staggering, and all these guys can think of is more tax cuts for the rich,” said Robert S. McIntyre, director of Citizens for Tax Justice. “It’s just plain weird.”