Focus Point - Cutting Capital GainsCommentary by Pete du Pont
May 25, 2001
I'm Pete du Pont with the National Center for Policy Analysis. The Club for Growth has made a convincing case for a permanent reduction in the capital gains tax from 20 percent to 15 percent. Three of its leading economists, Arthur Laffer, Lawrence Kudlow and Stephen Moore argue that the current slump doesn't have anything to do with consumers not spending less; rather it's investors investing less. That's where a capital gains cut comes in.
The last time there were capital gains cuts, in 1981 and 1997, the economy and the stock market got a significant boost. After the 1997 cut -- from 28 to 20 percent -- tax revenues doubled in a single year. One now would encourage capital formation that would lead to the same strong growth we sqaw in the mid-to late-90s.
Of course, capital gains cuts will always face opposition as a giveaway to the rich. It's the same kind of thinking that's put roadblocks in front of significant cuts in personal income taxes. But lower taxes are what put people to work and build the economy for the long run.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont, and I'll see you next time.