Some economists see the capital gains tax as a special and specific tax on risk-taking. After being reduced in the late 1970s and early 1980s, the capital gains tax rate was increased by 40 percent -- from 20 percent to 28 percent.

The result was fewer new businesses and less venture capital available, statistics show.

• New business incorporations rose at a 6.8 percent annual rate from 1968 to 1986 -- versus a meager 1.1 percent from 1987 to 1995.

• Real venture capital commitments rose at a 29.4 percent annual average rate from 1981 to 1986 -- compared to 6.5 percent from 1987 through 1995.

• If the average real rate of increase in venture funds during the early 1980s had been maintained, 1995 venture capital commitments might have topped $40 billion -- ten times the actual 1995 level.

• If new business incorporations had managed to continue at the average annual rate of increase from the previous two decades, almost 2.5 million more new businesses would have been incorporated from 1987 to 1995.

To encourage new business formation and economic growth, some economists support cutting capital gains taxes by at least 50 percent and indexing the gains to account for inflation.

Source: Raymond J. Keating (Small Business Survival Committee), "Please, Steal from the GOP, Mr. President," Washington Times, January 23, 1997.