Crapo Bill Would Stop Tax Hike On Capital Gains
Tells Treasury Secretary not to discourage investment in the economy
Washington, DC - Arguing that investors need certainty and not tax increases, Idaho Senator Mike Crapo has introduced legislation, S. 567, to make permanent the tax relief on capital gains and dividend payments originally approved by Congress in 2003. Crapo, a member of both the Senate Finance and Budget Committees, notes President Obama's proposed 2010 budget would allow tax rates on capital gains and dividends to rise from 15 to 20 percent for many American families. He said families and seniors in particular will be hard hit by such increases that could increase at the end of next year. The bill has 19 Senators who have signed on as co-sponsors.
Crapo raised the issue today with Treasury Secretary Timothy Geithner during a hearing of the Senate Budget Committee, suggesting President Obama should put off talk of tax increases during a failing economy. "Are these tax increases contingent on a recovery or are they going to happen regardless of what happens in 2011?," Crapo asked Geithner.
"We need to lay out an ambitious path for bringing those deficits down, commit to achieving that with a mix of measures on the resource side and the spending side that do the best possible job of leaving our economy stronger, and that's what the President's budget tries to do," Geithner responded.
"We should not be raising taxes on anyone during a recession," Crapo said following the hearing. "With our economy struggling, now is not the time to threaten further investment by raising taxes on capital gains and dividends. Action by Congress six years ago to lower these taxes to 15 percent, even lower for those in lower tax brackets, stimulated investment which in itself benefited the U.S. Treasury. In the five years after the tax rates were lowered to 15 percent, tax receipts to the Treasury actually increased by $117 billion over what the Congressional Budget Office had projected the receipts to be under the higher 20 percent rate.
Crapo added that tax policy directly affects jobs. "Even those not in upper tax brackets are affected because 60 to 80 percent of new jobs are created by small business and small business employs half the U.S. workforce. Many small businesses run their taxes through their personal income tax forms via S corporations, sole proprietorships and partnerships. There is so much uncertainty that individuals and businesses are keeping their money on the sidelines, rather than making investments now. Those who can invest don't worry about today's tax rates; they are concerned about what the tax rate will be two years from now, or five years from now, when those long-term investments are hopefully yielding gains. If the President's proposal says capital gains will be going up in 2011 there is a disincentive now for businesses, individuals and couples to make investments. For American families looking to make investments for the future education needs of their children, for businesses making hiring and capital investment decisions, and for seniors who rely on dividend payments to maintain their standard of living in their retirement, we need to provide certainty today that when this economy improves and they start seeing gains on their investments, that they are not going to be facing higher taxes," Crapo concluded.