WASHINGTON (AP) - The powerful small business lobby on Wednesday broke from the ranks supporting President Bush's proposed capital gains tax cut, saying it was not worth the income-tax increase the Democrats likely would demand in return.
``Small business generally doesn't find that (cutting) the capital gains rate is any great incentive if there is that kind of price to pay,'' said John Sloan, president of the National Federation of Independent Business.
Bush's renewed call for a capital gains reduction, sounded in his State of the Union message Tuesday night, drew the expected reaction in Congress: strong support from most Republicans and a cold shoulder from Democratic leaders.
``The chairman has no interest in seeing the capital gains issue surface this year,'' said Patrick Jones, a spokesman for Rep. Dan Rostenkowski, D-Ill., who heads the House Ways and Means Committee.
House Speaker Thomas S. Foley, D-Wash., agreed that the proposal probably won't fly. ``I don't think tax reduction is a good idea at this very moment,'' he said on NBC's ``Today.''
``The president talked about capital gains in a throwaway line, which should tell you there are divisions within the administration on this one,'' said Sen. Lloyd Bentsen, D-Texas, chairman of the Senate Finance Committee. ``I frankly don't think capital gains is going any place.''
Sen. Connie Mack, R-Fla., offered the argument put forth by most Republicans: ``A capital gains tax cut would stimulate an economy weakened by higher gasoline prices and provide an incentive to create new jobs.''
Capital gains, which are profits from the sale of investments, are fully taxed at the same rates that apply to other kinds of income. Bush tried vigorously during his first two years in office to have Congress exclude a portion of gains from taxation as a way of stimulating investment.
In 1988, the House passed a capital gains reduction but it was blocked by Senate Democrats, even though a clear majority of senators favored the cut. Last year, the reduction lost out when Democrats in both houses demanded that it be accompanied by higher overall taxes on those who would benefit most: higher-income Americans. …