With rising oil prices, rising unemployment, and inflation eating away at the U.S. economy, a powerful politician pushed for a populist tax hike in Washington 30 years ago. The year was 1978, the push for a tax hike came from President Jimmy Carter, and the tax in question was on capital gains. Carter wanted to tax capital gains at the same rate as ordinary income – effectively doubling the rate for many taxpayers, says Mark Bloomfield, president and CEO of the American Council for Capital Formation.
Carter didn’t get his tax hike. Congress passed a tax cut instead. The 1978 capital gains tax cut was an economic success, as we saw in the 1980s. What followed was a period of fluctuating capital gains tax rates. But a second round of substantial rate cuts came in 1997. Again the result was a clear benefit to the economy, says Bloomfield:
Rep. Charles Rangel (D-N.Y.), chairman of the House tax-writing committee, is proposing to increase the tax on capital gains. He is also calling for a full-scale and honest debate on tax policy. This is a debate we should welcome, says Bloomfield:
On Jan. 20, a new president and a new Congress will begin work on a new economic policy. The lessons from cutting capital gains taxes over the past 30 years shouldn’t be ignored, says Bloomfield.
Source: Mark Bloomfield, How We Beat the ’70s, Wall Street Journal, March 13, 2008.
For text: http://online.wsj.com/article/SB120536977668532201.html
For more on Taxes: http://www.ncpa.org/sub/dpd/index.php?Article_Category=20
FMF Policy Bulletin/ 25 March 2008
