Posted on 09/04/2001 7:34:06 AM PDT by tom paine 2
WASHINGTON -- Republican congressional leaders, anxious about the sluggish economy, will seek to slash taxes on capital gains to stimulate investment.
The proposal, to reduce the capital-gains rate to 15% from its current 20%, is part of a stimulus package that House Speaker Dennis Hastert and Senate Minority Leader Trent Lott will pitch in meetings with President Bush this week as Congress returns from its August recess. But while Mr. Bush is open to additional tax cuts this year, he will likely give a cool reception to the idea of a capital-gains rate cut, aides said. "He will push for those tax initiatives he proposed" in his budget, including tax incentives for charitable contributions and energy production, said Bush spokeswoman Claire Buchan.
The stimulus package also would include an extension of a research-and-development tax credit, energy-related tax breaks and fast-track trade negotiating authority. "The economy is not doing well, and the speaker wants to do something about it," said John Feehery, a spokesman for the Illinois Republican.
A spokesman for Mr. Lott said the Mississippi Republican will ask the president for a new 15% rate on assets held longer than one year.
Under the proposal, the capital-gains tax cut would expire after two years unless Congress extended it in the interim. One option under discussion is to attach the rate cut to a Democrat-sponsored bill to increase the minimum wage, which could come up for a vote as early as next month. Mr. Lott, though, is looking for other legislative vehicles.
The move underscores GOP concerns about the weak economy and the trouble it could cause Republicans in next year's elections. As Republicans seek to regain control of the Senate and maintain their narrow hold on the House, they worry that President Bush's $1.35 trillion tax cut won't net the political capital and spark the economic revival that they had hoped.
Ms. Buchan said Mr. Bush is willing to sign into law the additional tax measures he is proposing, despite the tight budget and criticism that tax cuts are helping deplete federal funds and eating into the politically sacrosanct Social Security surplus. She wouldn't comment on the president's position on capital-gains tax cuts, but Mr. Bush's ambivalence could put him at odds with his own allies in Congress.
Congressional Republicans believe a capital-gains tax cut would provide an immediate stimulant to sagging investment in the stock market. Many White House officials think this would provide a boost to the economy, as well as a short-term increase in federal tax revenues. But the president's closest advisers believe the position is politically untenable given the dwindling federal budget surplus and relentless attacks by Democrats over Mr. Bush's 10-year across-the-board tax cut for individuals that he signed into law earlier this year.
Most Democrats take a dim view of further tax cuts, given the new fiscal constraints. In the Democrat-controlled Senate, leaders will probably try to confine further action to acting on expiring business tax credits and small-scale business incentives, as they try to push through energy legislation and the minimum-wage increase. The president, meanwhile, plans to step up his attacks on Democrats for failing to offer an economic-recovery plan. A senior GOP aide said the president doesn't want to get thrown off message by dealing with additional tax relief in the current political environment.
Write to Shailagh Murray at shailagh.murray@wsj.com and Jim VandeHei at jim.vandehei
There's a big difference. I'd gladly trade an increase in the minimum wage for a large tax cut.
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