[Congressional Record Volume 143, Number 86 (Thursday, June 19, 1997)]
[House]
[Page H4083]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


 ANOTHER LOOK AT ISSUES OF ECONOMIC GROWTH AND A CAPITAL GAINS TAX CUT

  The SPEAKER pro tempore (Mr. Cooksey). Under a previous order of the 
House, the gentleman from California [Mr. Dreier] is recognized for 5 
minutes.
  Mr. DREIER. Mr. Speaker, I know the hour is late, but I would like to 
take just a few minutes to discuss an issue that was being raised 
earlier by my friend, the gentleman from Pennsylvania [Mr. Fox] and a 
wide range of other Members who were here discussing the need for us to 
look at the issue of economic growth. And also I wanted to respond in 
part to some of the statements that were made just a few minutes ago by 
my friend, the gentleman from New Jersey.
  As we look at the tax package that is moving forward, one of the 
things that has been discussed is the need for us to pursue a policy 
that does in fact encourage economic growth, and at the same time 
recognizes the need to increase the take-home pay of working Americans.
  The fact is, there is an important part of this package which, 
frankly, I wish had gone further, but because of the constraints 
imposed by the budget agreement it did not go as far as I would like to 
see it go, and that is one that relates specifically to the capital 
gains tax.
  On the opening day of the 105th Congress I was pleased to join with 
both Democrats and Republicans in introducing a bill that is numbered 
H.R. 14. The reason I remember it is that it takes the top rate on 
capital gains from 28 percent to 14 percent. Mr. Speaker, our goal was 
to recognize that the tax on capital is one of the most punitive taxes 
of all, that hurts most not those who are very rich, and I think we 
have pretty well succeeded in throwing that ludicrous argument out in 
which people have said reducing the tax on capital gains is nothing but 
a tax cut for the rich. We have, I believe, very successfully thrown 
that out because, as we look at the empirical evidence that we have, we 
have found that roughly 56 percent of those who are realizing capital 
gains have incomes that are less than $40,000 per year.
  If we look at those, those people are obviously not considered rich. 
What are they? They are people who have homes that may have appreciated 
in value, they have a mutual fund, they are retirees, they are small 
business men and women who are the backbone of this country.
  I believe that reducing that top rate on the capital gains tax will 
in fact, based on evidence that we have, increase the take-home pay for 
the average family in this country by $1,500. Why? It will come about 
because of the ensuing economic growth. We have got not just theory, 
which so many have people have said, oh, this is all based on theory, 
but we have actual facts.
  Take this entire century, and go back to the early 1920's. Andrew 
Mellon was the Treasury Secretary under President Warren J. Harding. At 
that time there was a reduction in tax rates, it anticipated the 
tremendous boom of economic growth that we saw through the 1920's, and, 
guess what, we even saw an increase in the flow of revenues to the 
Treasury.
  Our great chairman of the Committee on Ways and Means, the gentleman 
from Texas [Mr. Archer] has referred to the fact that this capital 
gains tax cut is going to increase the flow of revenues to the 
Treasury. Why? Because of the fact that we do not simply subscribe to 
that view that the pie is one size and can only be cut up in those 
little pieces. We subscribe to the view that the pie can grow.
  We are enjoying strong economic growth today, but I am convinced that 
it can be significantly stronger, because there are many Americans who 
have not been able to benefit from the economic growth that we have 
seen. Of course, I am referring to those who are in the inner cities in 
our country.
  We see this great talk that has been coming forward from both the 
President and the Speaker of the House about the need for us to look at 
the very serious societal problem that we have as race, in race 
relations. It seems to me, Mr. Speaker, that one of the key things we 
should do is recognize that a problem that exists in the inner city is 
primarily due to a lack of capital investment. Reducing the top rate on 
capital gains is going to play a big role in encouraging investment in 
a wide range of areas, and I believe it will provide a real boost to 
those who are in fact in the inner city.
  Mr. Speaker, reducing the top rate on capital gains is going to be a 
win-win all the way around. It is not a tax cut for the rich. It in 
fact is something that benefits working Americans and at the same time 
will encourage the $7 to $8 trillion that we have locked in from people 
who are literally afraid to sell because the tax rate on capital gains 
is so high today, they will be encouraged to move that.
  That capital will play a role in providing the much-needed boost in 
many parts of this country where people have not been able to benefit, 
and we will see from that growth an increase in our attempt to move on 
our glide path towards balancing the budget.
  Mr. Speaker, I just want to underscore the importance of this, and 
say that I hope very much that any of my colleagues who have not joined 
with the 160 to 165 Democrats and Republicans on board on this will in 
fact become cosponsors of H.R. 14, and continue to work towards a 
broad-based reduction in capital gains.
  I yield to my good friend, the gentleman from Pennsylvania [Mr. Fox].
  Mr. FOX of Pennsylvania. Mr. Speaker, I just wanted to take this 
opportunity to agree with the sentiments of the gentleman, because tax 
reform is the key to making sure that prosperity for all Americans will 
come about in this session.

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