Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Dave Camp, R-Mich., plan to hold a joint hearing Thursday to review the tax treatment of capital gains in the context of comprehensive tax reform.
The hearing, “Tax Reform and the Tax Treatment of Capital Gains,” will explore several tax reform policy issues relating to the treatment of capital gains. They include: background on capital gains taxation and its history; the impact of the capital gains tax rate on investor behavior; the effect of the differential tax treatment of capital gains and ordinary income on tax planning and tax avoidance; the revenue-maximizing rate on capital gains; the distribution of capital gains income across taxpayer income levels; and the types of assets eligible for capital gains treatment.
“The taxation of capital gains is one of the most widely discussed areas of our individual tax system, and it needs to be reviewed as part of comprehensive tax reform,” Camp (left) said in a statement. “With both the Ways and Means Committee and the Senate Finance Committee actively pursuing tax reform, it will be critical for Congress’s two tax-writing panels to continue working together closely.”
Martin Sullivan, chief economist at Tax Analysts, says that it is “becoming increasingly clear among tax experts that the better way to provide tax relief to capital income is through reduction of the corporation tax rather than through capital gains relief.” Of course, he adds, “it would be an extremely tough political sell, but look for these hearings to explore the possibility of raising the capital gains tax rate in exchange for a reduction in the corporate tax rate.”
After his committee began a “comprehensive review” of the nation’s tax system last year, Baucus said June 11 that he was “making progress on a detailed tax reform proposal that will attract bipartisan support.”
In reforming the tax code, Baucus (right) said, “My view is everything is on the table.”
“It has been more than 25 years since the last major tax reform occurred. The world has changed drastically in that time, and America’s tax code hasn’t kept up,” Baucus said.
Tax experts have agreed, however, that any tax reform or deficit and debt reduction plan would not occur before the presidential election in November, and would likely come next year.
Scheduled to testify at the hearing are:
- David H. Brockway, Partner, Bingham McCutchen LLP
- Dr. Lawrence B. Lindsey, President and CEO, The Lindsey Group
- Dr. Leonard E. Burman, Daniel Patrick Moynihan Professor of Public Affairs at the Maxwell School, Syracuse University
- David L. Verrill, Founder and Managing Director, Hub Angels Investment Group
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