Some tax specialists charge that the Clinton administration's opposition to capital gains tax-rate reductions is based on calculations that are just plain wrong. Treasury Secretary Robert Rubin has asserted that lowering capital gains rates would lead to a $33 billion loss of revenue over the next five years. He cites evidence provided by the Joint Tax Committee, but the committee's work has been consistently wrong in the past.

Here are the facts:

• From 1977 to 1985 -- a period when the top capital gains tax rate was reduced from a possible peak of just under 50 percent to 28 percent, then again to 20 percent -- receipts from that tax rose steadily every year, from $6.6 billion to $21.8 billion.

• In 1986, the top rate was raised from 20 percent to 28 percent -- actually reaching 33 percent when state and local income taxes are factored in, where it stands today.

• In 1995, total capital gains realized were $180 billion -- only slightly above the 1985 level of $173.4 billion, even though the value of domestic equities had increased fourfold.

Put another way, the ratio of capital gains realizations to the market value of all equities reached an all-time low of 2.32 percent in 1995.

By contrast, in the period 1982 to 1985 -- when the top rates were 20 percent -- the ratio varied between 5.91 percent and 8.06 percent.

Consider what effect this has had on revenues:

• If 1995 realizations of capital gains were 7.16 percent of the market value of domestic equities -- the average of the ratios prevailing in the 1982 to 1985 period -- realizations of capital gains would have been $556 billion in 1995, more than triple the actual level.

• If the average tax rate applied to such theoretical 1995 gains were cut in half, to about 12 percent, taxes paid in 1995 would have been $66.7 billion, rather than the actual $42.7 billion.

Thus, the federal government may have lost $24 billion in 1995 alone by keeping the rates so high.

Using February 1997 market value figures and applying a 12 percent top capital gains tax rate, the government could now be taking in annual capital gains tax receipts of $77 billion -- 80 percent above the 1995 actual total.

Source: Oscar S. Pollock (Ingalls & Snyder LLC), "Found Money," Wall Street Journal, March 14, 1997.