[Congressional Record Volume 143, Number 41 (Wednesday, April 9, 1997)]
[House]
[Pages H1369-H1370]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       THE ISSUE OF 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 rise to expand on a couple of remarks made 
by my friend from Houston, Dr. Paul, and to talk about an issue which I 
actually have raised twice here on the floor today, once during the 1-
minutes, and then I discussed it during the time that I was managing 
the noncontroversial rule that we had for consideration of the 
suspensions, and that is the issue of capital gains.

[[Page H1370]]

                              {time}  1415

  My friend from Texas, Mr. Paul, said that we should have no capital 
gains tax, and I happen to agree with that. But frankly, we need to 
begin moving in the direction of no tax on capital, and I am very 
pleased to have introduced, with the company sponsorship of many 
Members, my friend in Huntington Beach, Mr. Rohrabacher, and many 
others, a bill, H.R. 14. It is called H.R. 14 because it takes the top 
rate on capital gains from 28 percent to 14 percent. I believe that 
this measure will go a long way toward increasing the take-home pay of 
working Americans.
  Many people used to say that the capital gains tax cut was nothing 
but a tax cut for the rich, when in fact, we knew all along that by 
unleashing capital we could create jobs, increase the flow of revenues 
to the Treasury, but recent studies have shown that we not only can do 
those things, but on average, the take-home pay of working Americans 
will increase if we reduce that top rate on capital.
  One of the things that people have also said who historically have 
talked about the capital gains tax cut as being nothing but a tax cut 
for the rich, there has been a realization that average Americans are 
saving a little more, and they are investing in some things, and we 
have found that there are 63 million American families that actually 
own mutual funds of the 90 million some odd families. So there is 
clearly a broad-based appeal and potential support for reducing the top 
rate on capital.
  I say it is broad-based because on the opening day of this Congress, 
I was pleased that I was joined with Democrats and Republicans to 
introduce this. In fact, as initial sponsors on our side of the aisle, 
my colleague who serves on the Committee on Ways and Means, the 
gentleman from Pennsylvania [Mr. English] joined me and we had actually 
three Democrats who joined. The gentlewoman from Kansas City, MO [Ms. 
McCarthy]; we had the gentleman from Texas [Mr. Hall]; and the 
gentleman from Virginia [Mr. Moran], three Democrats and two 
Republicans on the opening day were the prime sponsors of this 
legislation to reduce the top rate on capital.
  It is not targeted; it does not have the Government going in and 
selecting whose investment is taxed at a lower rate than someone 
else's, it simply reduces across the board, cutting in half that top 
rate.
  What will this bring about? Well, we have today probably approaching 
$8 trillion of capital that is locked in because there are widows who 
are concerned about the prospect of selling their home or other 
investment because it has appreciated in value. There are family 
farmers who are concerned about selling, because the capital gains tax 
rate is so high. There are small business men and women who very much 
want to sell, but they feel that they should not because that tax is so 
high.
  It seems to me that a capital gains tax rate reduction is something 
that we could put into place to help ensure that we do not slip into 
recession. I see it as one of the best insurance policies to prevent us 
from going into recession.
  Then as I alluded to a moment ago, the increase in the flow of 
revenues to the Federal Treasury which has happened every single time 
it has been done, reducing the top rate on capital gains in this 
century, would obviously, based on this empirical evidence, follow our 
reducing the top rate on capital.
  Back in 1993 we found that if we had a 15-percent rate on capital 
gains, we could, over a 7-year period, increase the gross domestic 
product by $1.3 trillion, create a million new jobs and generate $220 
billion in revenues to the Treasury. That comes about because we 
unleash that $7 trillion to $8 trillion that is locked in.
  So a capital gains tax rate reduction is critically important in our 
quest towards a balanced budget, towards trying to deal with the 
national debt. And unlike the so-called family tax cuts that we 
continue to hear about, this would be permanent in that it would 
increase, as I said earlier, the take-home wages by $1,500 for the 
average American family.
  Mr. Speaker, we are up to, as of this afternoon, 118 cosponsors for 
this very important measure, and I would like to encourage the Speaker 
and my colleagues on both sides of the aisle to join as cosponsors of 
this very important measure.

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