Ah, someone else woke up! clo
Capital Gains Tax Break Threatened in Plan
By Richard Rubin - Jul 21, 2011 12:01 AM ET .
July 20 (Bloomberg) -- U.S. Senator Michael Bennet, a Colorado Democrat, talks about the so-called Gang of Six senators' deficit-reduction proposal and the impact a U.S. sovereign debt default may have on capital markets.
The bipartisan deficit-reduction plan gaining momentum in the U.S. Senate would likely require lawmakers to curtail or end the preferential tax treatment of capital gains and dividends.
The proposal from the so-called Gang of Six doesn’t mention capital gains and dividends. The plan’s goals for income tax rates, federal revenue and progressivity would likely require Congress to raise tax rates on investment income, said tax analysts who favor and oppose preferential tax rates on capital gains and dividends.
The proposal, which would lower income tax rates and broaden the tax base, is similar to plans issued over the past year by a bipartisan fiscal commission and the Bipartisan Policy Center in Washington. Those plans suggested taxing capital gains and dividends as ordinary income for the first time since 1990.
“You cut marginal tax rates and you still want to have a progressive tax system, you have to tax capital gains,” said Leonard Burman, a professor of public affairs at Syracuse University in New York who helped write the Bipartisan Policy Center’s report.
Individual and corporate income is taxed at a top rate of 35 percent. Dividends and capital gains on most assets held longer than one year are taxed at 15 percent, under tax laws set to expire at the end of 2012. The 2010 health-care law included a new 3.8 percent tax on capital gains, dividends and other passive income reported by high-income taxpayers, and that extra tax is scheduled to take effect in 2013.
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Bloomberg.com
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