Capital-Gains Tax Cut Sought to Help Fund Small Businesses
WASHINGTON (AP) _ President Clinton will ask Congress to cut capital-gains taxes on long-term investment in small business as part of his plan to create jobs, supporters said Tuesday.
"This is a modest tax incentive that holds great promise for hundreds of thousands of small firms with good ideas but not enough capital," said Sen. Dale Bumpers, D-Ark., a chief sponsor of the proposal.
"I know the president is firmly committed to this proposal," Bumpers said. He said he has been assured that virtually every part of his bill will be included in the economic plan that Clinton will spell out tonight.
Another sponsor, Rep. Robert Matsui, D-Calif., said he is confident that the capital-gains reduction will be a part of any tax bill passed by Congress this year.
The proposed capital-gains reduction, which Clinton endorsed during his campaign last year, is not nearly so broad as the one for which President Bush fought unsuccessfully for four years.
While Bush's plan would have applied virtually across the board to profit from the sale of most assets, including old investments, the one advocated by Clinton would benefit only those who make new purchases of stock in a small business.
The Joint Committee on Taxation estimates Bumpers' bill would cost $1 billion in lost revenue over the next six years.
Under present law, capital gains _ which are profits from the sale of investments and personal property _ are fully taxed like most other income. But while the maximum rate on wages and other income is 31 percent, capital gains are taxed a top rate of 28 percent.
Under Bumpers' bill, at least half the gain from a new purchase of stock in a small corporation would be tax-free if the investment was held for a long term.
The 50-percent exclusion would apply to stock bought in the future directly from a corporation _ not a broker _ whose total capital is $100 million or less. …