The Issue on Capital Gains Tax in US

A more good assessment of the issue may be obtained through a consideration of the arguments on their merits, without invoking liberal and conservative bogeymen from America's semipolitical closet.

THE ARGUMENTS FOR AND AGAINST A REDUCTION IN

There exists a wide variety of arguments both in support of and in opposition to final causes to reduce the levy station on capital-gains. Many of these arguments are thoughtful and deserve a fair hearing. Most, unfortunately, are simply inane, and are make by politicians attempting to push some constituent's emotional button (Jenkins, 1990; Wanniski, 1989), or they are efforts to promote some other type of taxation reform by challenging a reduction in the tax rate for capital-gains (Panetta, 1990; Galbraith, 1989).

In spite of all the political rhetoric on the conservative side, and all of the efforts by liberals to curlicue aspersions on a capital-gains tax spread out as a means of promoting their own pet tax reform, there tolerate several sound arguments both pro and con on the issue. All of these arguments cannot be considered in this brief exploration. Therefore, four of the almost significant of these arguments--two pro and two con--have been selected for a more critical assessment of the issue.

Arguments Supporting A Capital-Gains Tax Cut

A firm argument favoring a reduction in the tax rate for capital-gains is that much of

This argument favoring a reduction in the tax rate for capital-gains holds that much of what is shortly taxed as capital-gains, in fact, represents nothing more than changes in nominative values of assets resulting from inflation in the general economy (Archer, 1990). horizontal The New York Times (1989), which editorially opposes a tax cutting for capital-gains, acknowledges the validity of this argument, and supports such indexation for future investments in corporate equity.

Birnbaum, J. H., and Rogers, D. (1989, folk 27). Capital-gains tax fight causes some liberals and conservatives to switch usual alliances. The smother Street Journal, p. A24.

This argument opposing a capital-gains tax cut holds that the Bush Administration proposal for a dramatic biennial reduction followed by a later increase in the tax on capital gains would simply provide a windfall for the rich, who would take the money and run, and, because the capital-gains tax would be increase in just two years, would not reinvest the money in the way projected by the Administration (Rostenkowski, 1990). The greatest tarnish in the Administration proposal and in its defense of its proposal is the dramatic two-year rate reduction followed by a later increase in the tax rate on capital-gains. In fact, this two-step proposal would benefit primarily the soaked (Pechman, 1989), and, as opposed to an honest pursuit of a capital-gains tax reduction, it is, in fact, simply a budgetary ploy to get the Administration to avoid proposing program cuts, and avoid proposing tax increases, tour skirting the spirit of the deficit reduction law, if not the earn (Birnbaum, and Rogers, 1989).

Each of the four arguments identified in the preceding share is assessed in this section. The arguments are assessed separately.

Arguments Opposing A Capital-Gains Tax Cut

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