[Congressional Record Volume 143, Number 1 (Tuesday, January 7, 1997)]
[House]
[Page H37]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 REDUCING THE TAX RATE ON CAPITAL GAINS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California [Mr. Dreier] is recognized for 5 minutes.
  Mr. DREIER. Mr. Speaker, I have taken out this special order, and as 
we all saw, I got in the chair before I was able to deliver it, so I am 
pleased that my friend, the gentleman from Florida, was able to deliver 
the first special order of the 105th Congress.
  Mr. Speaker, I have taken this time out to talk about legislation 
which I very proudly introduced today with a number of my colleagues. 
We know that the message that came from last November's election was 
that the American people want us to put the partisan political 
pyrotechnics aside and they want us to do a job.
  I am very gratified that we saw Democrats and Republicans alike, 
embrace what for lack of a better term, have to be considered 
traditional Republican themes. The themes that the President ran on, 
the themes that Republicans and many Democratic candidates for Congress 
ran on, were balancing the budget, trying to reduce the size and scope 
of government, reducing the tax burden on working Americans. Those are 
the sorts of things that I believe a majority of this institution want 
to see us deal with.
  I think we do have an opportunity to proceed in a bipartisan way. We 
have gone through an extraordinarily difficult and challenging day, and 
the next couple of weeks are going to be tough, but I hope and pray 
that we will be able to put the battles that we have seen in the media 
over the past couple of weeks behind us and do what I believe the 
American people want us to do, and that is govern.
  I have done what I believe is my bit here on the opening day. I am 
very pleased that I was able to join with Democrats and Republicans in 
introducing legislation which will go a long way toward dealing with 
one of the problems that we have in this country, and that is lack of 
available capital.
  What I have done is introduced a bill which is numbered H.R. 14. It 
is H.R. 14 because it is going to take the top 28-percent rate on 
capital gains and reduce that to 14 percent as a top rate.
  In years past we have heard this rhetoric that reducing the tax on 
capital gains is nothing but a tax cut for the rich. But I was 
gratified that in the Presidential campaign, Bill Clinton talked about 
reducing the tax rate on capital gains for homeowners. He wanted to 
target it. I happen to believe very strongly that rather than targeting 
it, we should allow the American people to make a determination as to 
exactly which capital asset they have that they want to sell and have a 
lower rate on capital gains for. I want them to be able to make that 
decision themselves.
  In the past we have heard that there is a tremendous cost to reducing 
the tax rate on capital gains. The fact of the matter is we have, with 
this bill, done a great deal of study on it. It is not only a 
theoretical study, but it is empirical evidence which has shown, going 
all the way back to 1921 when Andrew Mellon was Treasury Secretary 
under President Warren G. Harding, reducing that top rate increases 
revenues to the Treasury. John F. Kennedy we know did it in the early 
1960's, Ronald Reagan did it in the 1980's, and we have a good 
opportunity to do this today.
  What will it create? It will create, I believe, a tremendous flow in 
revenues to the Treasury. Why? Because there is between $7 trillion and 
$8 trillion of locked-in capital that is there. People are not willing 
to sell it because of the punitive tax rate that exists. So, clearly in 
the first years we would see a great boost.
  In 1993, when I assembled the zero capital gains tax caucus, we found 
over a 7-year period a 15-percent capital gains tax rate would increase 
the gross domestic product by $1.3 trillion, create 1 million jobs, and 
generate $220 billion in revenues to the Federal Treasury.
  I am convinced that we can do this in a bipartisan way, so much so 
that of the original cosponsors, there are two Republicans and three 
Democrats. I am very pleased that my colleague, the gentlewoman from 
Kansas City, MO, Karen McCarthy, has joined as a lead cosponsor of 
this; a great member of the Committee on Ways and Means, the gentleman 
from Pennsylvania, Phil English, who is beginning his second term, has 
joined in this; the gentleman from Virginia, Mr. Jim Moran, a Democrat, 
has joined as an original cosponsor; and the leader of the Blue Dogs on 
this issue is the gentleman from Texas, Mr. Ralph Hall. So we have 
three Democrats and two Republicans.
  While some pundits out there may like to argue that the era of 
bipartisanship is over, they are wrong, because on the opening day we 
have begun in a bipartisan way to deal with this very important 
question of reducing that top rate on capital gains to help middle-
income wage earners and all Americans, and those at the bottom end of 
the spectrum, as we try to get capital into the inner city and other 
spots which are desperately in need, as Speaker Gingrich mentioned in 
his acceptance speech today.
  Mr. Speaker, I wish everyone a very happy, prosperous, and healthy 
1997.

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