[Congressional Record Volume 143, Number 152 (Tuesday, November 4, 1997)]
[Extensions of Remarks]
[Pages E2174-E2175]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    CAPITAL GAINS TAX SIMPLIFICATION

                                 ______
                                 

                         HON. LINDSEY O. GRAHAM

                           of south carolina

                    in the house of representatives

                       Tuesday, November 4, 1997

  Mr. GRAHAM. Mr. Speaker, today I am introducing legislation that 
removes the short-, mid-, and long-term distinctions on capital gains 
tax which were part of previous law and included in the Taxpayer Relief 
Act of 1997. This change simplifies capital gains tax assessments by 
removing arbitrary time constraints and applying the rates now, instead 
of in 2006. Without this change, gains made within the short- and mid-
term rates will receive no tax break at all unless they are held for 
excessive periods of time.
  The very idea of the Federal Government dictating time constraints on 
the holding of investments runs counter to the fundamental concept of 
our market-driven economy. With present holding periods, how can we 
conclude that an 18-month investment is better than a 17.9-month 
investment? For example, if an investor reaped $1,000 in capital gains, 
they would receive a return of $602 after taxes if they held it for 17 
months and 30 days. But, after holding it for 1 day more, their after-
tax return would jump to $720. That is a ridiculous 20 percent 
difference in 1 day. This legislation removes these conditions.
  As we discuss the modification and simplification of the present Tax 
Code, this bill demonstrates Congress' desire to bring about an 
immediate beneficial change. It is becoming more and more evident that 
the Tax Code is a growing impediment to families, small business, and 
investors. While we conduct hearings and debate on what changes are to 
be made, streamlining the capital gains tax

[[Page E2175]]

regulations in the interim shows the American people we are making 
progress toward a simple and lasting solution.
  No changes in the gains tax percentages are made in this measure. The 
rates, agreed to by the Clinton administration earlier this year, would 
simply be applied without the time constraints. It is not only 
bipartisan, but logical as well. No concessions are made to corporate 
or big business capital gains taxes, nor is this bill designed to aid 
the wealthy. It allows individuals the opportunity to make investment 
decisions based on the market, rather than by obtuse Government time 
constraints. The rates in the present law are fair, the holding periods 
are not.
  Mr. Speaker, this is a tremendous opportunity to help American 
families invest for their future. This bill removes frustrating 
obstacles for small businesses and investors who are often stymied in 
their efforts to reinvest their gains immediately because of the 
excessive losses they would incur under current law.
  I urge my colleagues to support this technical change to the Taxpayer 
Relief Act of 1997. Removing the time constraints on capital gains tax 
demonstrates our desire to simplify the Tax Code and help Americans 
invest without unnecessary restrictions.

                          ____________________