As Congress tackles broad tax reform, where to set the rates on capital gains will be the most controversial and complex issue lawmakers must tackle, a lawmaker said.
During a joint hearing held Thursday by the Senate Finance and House Ways and Means committees on the treatment of capital gains, Rep. Sander Levin, D-Mich., ranking member on the Ways and Means Committee, said the treatment of capital gains will be “the major and most controversial issue” in reforming the tax code.
“We need to be optimistic but realistic,” Levin said, with “much less talk about targets and more about tradeoffs.”
The lawmakers held the joint hearing a day before they broke for recess until after the election.
Senate Finance Committee Chairman Max Baucus, D-Mont., said during the hearing that a comprehensive review of the rates on capital gains must be taken to find a level that “sparks broad-based growth, creates jobs and strengthens the economy.” He added that the reform process needs to consider the capital gains rate in conjunction with those on individual wage income, corporate income and dividends.
“In order to get tax reform done, we’ll need members of both parties and both chambers willing to tackle the tough issues,” Baucus said.
As it stands now the maximum capital gains tax rate is 15%, as compared to the maximum individual ordinary income tax rate of 35%.