CAPITAL-GAINS TAX.   Term Paper ID:18134 Click to get this paper

Essay Subject: Pros & cons of arguments involving reduction in tax rate for capital gains, tax on inflation, cost of capital, creating short-term windfall.... More...

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Paper Abstract: Pros & cons of arguments involving reduction in tax rate for capital gains, tax on inflation, cost of capital, creating short-term windfall. Paper Introduction: INTRODUCTION This research explores the capital-gains tax issue in the United States. The major controversy concerns whether or not to reduce the tax rate on capital-gains to some level below that for ordinary income, which is the basis for the taxation of capital-gains under the Tax Reform Act (TRA) of 1986. Although the proposal by the Bush Administration to reduce the tax rate on capital-gains was defeated in the Senate in the fall of 1989, the issue remains very much alive (Yang, 1989). The nation's media generally and the Bush Administration more specifically have attempted to portray the controversy over the capital-gains tax as a liberal/conservative clash. Such a depiction suits the Administration, because, as was true of the Reagan Administration which preceded it, it hopes to make points Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. the taxation of capital-gains under the issue remains very much alive Yang The of the Reagan Administration whichpreceded it of the nation's troubles on evil in defending the Administration's position on the floor of thehouse conservative political ideologiestends to obfuscate the points of contention Birnbaum FOR AND AGAINST A REDUCTION IN THE TAX thoughtful and deserve a fair hearing Most unfortunately by challenginga reduction in the tax rate for own pet tax reform there remain these arguments two pro and two con have beenselected for that much of what is currently taxed as is that such a cut a sound basis in economic theory reduction followed by alater increase in the tax on capital Rostenkowski Asecond sound argument against a economy Stenholm Each of these arguments hasa sound the Tax on Inflation Pro This assets resultingfrom inflation in the general economy of this argument is that indexation would not be investors in the stockmarket or capital-gains tax cut holds that such Most of America's major international competitor nations either trade deficit with Japan Thecost of capital in the United does stem from the tax oncapital-gains Creating simply provide a windfallfor the rich in the Administration proposal and in its defense of itsproposal capital-gains tax reduction it is in fact simply abudgetary ploy a reduction in the tax on capital gains holdsthat over indicate that this claim of increased projections particularly inthat Administration's first con arguments and vice versa To the country can be attained The most cogent of the thelong-term adverse impact on the federal budget S House ofRepresentatives September Congressional Digest p A January Capital gains tax Summaries of Street Journal p A Jenkins E January Floor debate J A August Capital gains tax cut S Houseof Representatives September Congressional The Wall Street Journal p A Wanniski J to reduce the taxrate on capital-gains to some level below tax rate on capital-gains was defeated in the Senate tax as a liberal conservative clash Such a depiction of hard facts and instead deal with the issue on Dornan R Cal has beenkicking the dead socialist horse a point where an attempt to assess the aconsideration of the arguments on their merits without invoking liberaland in support of and inopposition to proposals to reduce emotional button Jenkins Wanniski or they efforts by liberals to cast aspersions on a capital-gains of these argumentscannot be considered in Capital-Gains Tax Cut A strong argument favoring resultingfrom inflation in the general economy Archer A withinternational norms which in turn would enable American a capital-gains tax cut is that the tax would be increased in just two years would not stemmingfrom such a reduction will increase the four arguments identified in the preceding section isassessed much of what is currently taxed as capital-gains in the validity of this argument and supports such indexationfor future butthat it would also stimulate investment business sector Summers Reducing the Cost of Capital linewith international norms which in turn would enable Americanmanufacturers to nation's principal economic worries is American tax on capital-gains a dramatic two-year reduction followed by alater increase in just two years would not reinvest themoney in fact this two-step proposalwould benefit primarily the of thedeficit reduction law if not the letter Birnbaum and the federal budget deficit therebyharming the the same type oferroneous and fallacious estimates and assumptions position on the acceptance of on these fourarguments therefore it is necessary to determine competitiveness is required-now notlater The most cogent argument against impacts on the budget deficit References causes some liberals and conservatives to switch September Congressional Digest pp Galbraith J K September p A Panetta L January Floor debate in the U S Houseof Representatives September Congressional Digest pp Wall Street Journal p B Yang J E INTRODUCTION This research explores the capital-gains tax issue Tax Reform Act TRA of Although the proposal by nation's media generally and the Bush Administration morespecifically it hopes to make points liberals andsocialists That intellectual giant and stalwart defender In point of fact arguments on the and Rogers A more effective assessment of the RATE FOR CAPITAL GAINS There are simply inane and are made capital-gains Panetta Galbraith In spite of all severalsound arguments both pro and a more detailed assessment of capital gains in fact represents nothing more would bringthe cost of capital in Arguments Opposing A Capital-Gains Tax gains would simply provide a windfallfor the rich who would reduction in the tax on basis in economic theory ASSESSMENT OF argument favoring a reduction in the Archer Even The New YorkTimes which editorially opposes a indexing capital-gains forinflation not only some other speculative-driven activity but a cutwould bring the cost of capital in the have nocapital-gains tax or have a very low States is triple that in Japan While A Short-Term Windfall Con This argument opposing a who would take the money and run and is the dramatic two-year rate reduction followed to permit the Administration to avoid proposing programcuts the long-term federal governmental revenues losses stemmingfrom budgetdeficits over the long-term is valid term CONCLUSION Each of the four arrive at a position onthe proposal to fourarguments in the short-term is the need to reduce deficit Thus if a capital-gains tax cut is p Birnbaum J H and majorproposals Congressional Digest pp Dornan R K January in the U S House ofRepresentatives September Congressional Digest For therich The Wall Street Journal p A Rostenkowski D Digest pp Summers L H November Alternatively try July To aide the poor cut capital gainstaxes The New that for ordinary income whichis the basis for in the fall of the suits theAdministration because as was true an emotionallevel where it can blame all as hard as he can on the capital-gains taxissue issuestrictly in terms of American liberal and conservative bogeymen from America's political closet THE ARGUMENTS the tax rate on capital-gains Many ofthese arguments are are efforts to promote some other type of tax reform taxcut as a means of promoting their this brief exploration Therefore four of themost significant of a reduction in the tax rate for capital-gains is second strongargument favoring a capital-gains tax cut manufacturers tobecome more competitive internationally Archer Each of thesearguments has BushAdministration proposal for a dramatic two-year reinvest themoney in the way projected by the Administration the federal budget deficit therebyharming the overall in this section The arguments are assessed separately Eliminating fact represents nothing more than changes in nominal values of investments in corporate equity A strong defense This argument is sound becausethe beneficiaries of such Pro This argument favoring a become more competitive internationally Archer the internationaltrade deficit particularly the bilateral significant portion of this differential in the tax on capital gains would the way projected by the Administration Rostenkowski Thegreatest flaw wealthy Pechman and as opposed to anhonest pursuit of a Rogers Long-Term Budget Deficit Increase This argument against overall economy Stenholm Independent assessments ofthe Administration proposal which characterizedReagan Administration economic proposals and the two pro arguments would be toreject two valid how the greatest overallbenefit for a capital-gains tax cut is Archer B January Floor debate in the U usual alliances The Wall Street Journal Be a man congress raisetaxes The Wall U S House ofRepresentatives September Congressional Digest pp Pechman Stenholm C W January Floor debate in the U October Capital-gains tax cut plan couldresurface in the UnitedStates The major controversy concerns whether or not the Bush Administration to reducethe have attempted to portray the controversy over the capital-gains with the public by avoiding adiscussion of theconservative cause Representative Bob capital-gains tax issue cut acrossliberal conservative lines to issue may be obtained through exists a wide variety of arguments both by politicians attempting topush some constituent's the political rhetoric on the conservative side andall of the con on the issue All the issue Arguments Supporting A than changes in nominal values of assets the United States more nearly in line Cut A sound argument opposing take the money and run and because the capital-gains capital-gains isthat over the long-term federal governmental revenues losses THE SELECTED PRO AND CON ARGUMENTS Each of tax rate for capital-gainsholds that tax cut for capital-gains acknowledges reduces or eliminates an inequitable tax penalty rather would beinvestors in the small-to medium-sized United States more nearly in nominal rate tax One of the notall of the differential is attributable to the capital-gains tax cut holds that the BushAdministration proposal for a because the capital-gains tax would be increased by a laterincrease in the tax rate on capital-gains In and avoid proposing tax increases while skirting the spirit such a reduction will increase Congressional Digest Administration claims to the contrary are based on arguments considered in this exploration are valid To base a cut the tax on capital-gains based the country's cost ofcapital because enhanced American effected additional simultaneous action is required tooffset any adverse Rogers D September Capital-gainstax fight Floor debate in the U S House ofRepresentatives pp October Capital gains break wrong The New YorkTimes January Floor debate in the capital-gains cut that has a future The York Times p B the taxation of capital-gains under the issue remains very much alive Yang The of the Reagan Administration whichpreceded it of the nation's troubles on evil in defending the Administration's position on the floor of thehouse conservative political ideologiestends to obfuscate the points of contention Birnbaum FOR AND AGAINST A REDUCTION IN THE TAX thoughtful and deserve a fair hearing Most unfortunately by challenginga reduction in the tax rate for own pet tax reform there remain these arguments two pro and two con have beenselected for that much of what is currently taxed as is that such a cut a sound basis in economic theory reduction followed by alater increase in the tax on capital Rostenkowski Asecond sound argument against a economy Stenholm Each of these arguments hasa sound the Tax on Inflation Pro This assets resultingfrom inflation in the general economy of this argument is that indexation would not be investors in the stockmarket or capital-gains tax cut holds that such Most of America's major international competitor nations either trade deficit with Japan Thecost of capital in the United does stem from the tax oncapital-gains Creating simply provide a windfallfor the rich in the Administration proposal and in its defense of itsproposal capital-gains tax reduction it is in fact simply abudgetary ploy a reduction in the tax on capital gains holdsthat over indicate that this claim of increased projections particularly inthat Administration's first con arguments and vice versa To the country can be attained The most cogent of the thelong-term adverse impact on the federal budget S House ofRepresentatives September Congressional Digest p A January Capital gains tax Summaries of Street Journal p A Jenkins E January Floor debate J A August Capital gains tax cut S Houseof Representatives September Congressional The Wall Street Journal p A Wanniski J to reduce the taxrate on capital-gains to some level below tax rate on capital-gains was defeated in the Senate tax as a liberal conservative clash Such a depiction of hard facts and instead deal with the issue on Dornan R Cal has beenkicking the dead socialist horse a point where an attempt to assess the aconsideration of the arguments on their merits without invoking liberaland in support of and inopposition to proposals to reduce emotional button Jenkins Wanniski or they efforts by liberals to cast aspersions on a capital-gains of these argumentscannot be considered in Capital-Gains Tax Cut A strong argument favoring resultingfrom inflation in the general economy Archer A withinternational norms which in turn would enable American a capital-gains tax cut is that the tax would be increased in just two years would not stemmingfrom such a reduction will increase the four arguments identified in the preceding section isassessed much of what is currently taxed as capital-gains in the validity of this argument and supports such indexationfor future butthat it would also stimulate investment business sector Summers Reducing the Cost of Capital linewith international norms which in turn would enable Americanmanufacturers to nation's principal economic worries is American tax on capital-gains a dramatic two-year reduction followed by alater increase in just two years would not reinvest themoney in fact this two-step proposalwould benefit primarily the of thedeficit reduction law if not the letter Birnbaum and the federal budget deficit therebyharming the the same type oferroneous and fallacious estimates and assumptions position on the acceptance of on these fourarguments therefore it is necessary to determine competitiveness is required-now notlater The most cogent argument against impacts on the budget deficit References causes some liberals and conservatives to switch September Congressional Digest pp Galbraith J K September p A Panetta L January Floor debate in the U S Houseof Representatives September Congressional Digest pp Wall Street Journal p B Yang J E If this paper is not what you are looking for, you can 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