NCPA - National Center for Policy Analysis

New Push to Cut Capital Gains Taxes

July 2, 1999

One of the tax cuts being championed by House Republicans is a reduction in capital gains tax rates. Analysts say such a move would have strong political appeal.

  • More than one-third of American adults who earn less than $30,000 a year own stocks.
  • A study undertaken for the American Council for Capital Formation projects that the 1997 law which cut the rate for long-term capital gains from 28 percent to 20 percent will increase U.S. household income by an average of $309 -- in 1999 dollars -- each year beginning in 2007, and the average worker's wage will increase by $250 a year.
  • Among industrial nations, U.S. capital gains tax rates are higher than average.
  • Only Australia and the United Kingdom have higher rates than the U.S.; however, unlike the U.S., they both index their rates for inflation.

House Republicans are proposing first to cut long-term capital gains rates from 20 percent to 15 percent. Then they would cut them again to 10 percent by 2005.

Source: Editorial, "The People's Tax Cut," Investor's Business Daily, July 2, 1999.


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