[Congressional Record Volume 143, Number 28 (Thursday, March 6, 1997)]
[House]
[Pages H784-H785]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   THE MOST UNFAIR TAX, CAPITAL GAINS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Pennsylvania [Mr. Peterson] is recognized for 5 minutes.
  Mr. PETERSON of Pennsylvania. Mr. Speaker, it is a pleasure today to 
stand and speak out against the tax that I think is the most unfair tax 
in this country, the capital gains tax. This is a tax that has been 
debated for a decade in this country and it has been debated and has 
not been cut because, in my view, those who oppose cutting this tax say 
that it would be a tax break for the rich. And who wants to give the 
rich a tax break? None of us.
  But that is not a fair statement. When you look at the record, 37 
percent of the people who pay the capital gains tax make less than 
$30,000 in income a year. Is that the rich? Fifty-seven percent make 
less than $50,000 a year. Is that the rich? Seventy-four percent make 
less than $75,000 a year. Is that the rich? Who does it really affect? 
I think one of the most detrimental effects is on our farmers, our 
restaurateurs, our merchants, small manufacturers, small investors, and 
many of our senior citizens.
  I want to give Members an iron-clad example. If a couple bought a 
farm in 1957 for $40,000 and they just maintained that farm until today 
and sold it, it would probably bring about $400,000, only because of 
inflation, not because it is of more value, just keeping equal. That 
couple would pay $111,000 of that money back to the Federal Government 
who has done nothing to help them, only tax them, for all of that time. 
Is that fair? I do not think so.
  Most farmers and small businesspeople do not have savings plans and 
do not have retirement systems. They depend on the value of their farm 
and their small business when they sell it as a nest egg to augment 
their Social Security.
  Yes, the capital gains tax taxes inflation as it did with that 
farmer. Who taxes capital gains? The growing countries of the world, 
Hong Kong, the Netherlands, Germany, and Japan, do not. They do not tax 
capital gains. Other countries index assets for inflation so that you 
do not pay on a false growth. Inflation is not a growth in value.
  The record is clear. In 1978 through 1985 when we cut our capital 
gains tax in this country 30 percent, from 50 to 20, revenues actually 
increased from $9 billion a year to $26.5 billion. In 1986 when we 
increased it from 20 percent back to 28 percent, 6 years later revenues 
were just equal. It did not grow. We did not benefit.
  The 28 percent capital gains tax rate has locked up trillions of 
dollars of needed capital to reinvest in our sluggish rural economy in 
America. Too much of rural America is struggling to provide 
opportunities for our young people. It is certainly obvious to me that 
a capital gains tax cut is not a tax cut for the rich. It is for our 
family farmers. It is for the local merchants, small manufacturers, our 
neighbors who have invested in a business or in stocks, and many of our 
senior citizens who would like to sell their business and be able to 
enjoy the fruits of their labor.
  I call upon my colleagues today to make our No. 1 priority cutting 
and initially eliminating the capital gains tax, because it is the 
greatest deterrent to economic growth and a future for

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our young people that we have in this country today.

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