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US Republican Leader Calls For Capital Gains Tax Rate Cut

Mike Godfrey, Tax-news.com, Washington

17 January 2001

In Washington this week Senate Republican Leader, Trent Lott, called for the capital gains tax rate to be slashed which would, he said, boost the US economy.

Mr Lott's proposal was announced in an interview which was broadcast last weekend by CNN. The current capital gains tax is 20 per cent but Mr Lott argued that a new 15 per cent rate would provide the US economy with a much-needed boost. Referring to the last cut from 28 per cent down to 20 per cent three years ago, Mr Lott stated: 'The last time we did it, we had another spurt in the economy.'

Despite his call for a cut in the capital gains tax, Mr Lott was at pains to voice his full support for Mr Bush's planned tax cuts. When asked if he would push the president-elect towards capital gains, Mr Lott said: 'the situation is different now in this country, economically, than it was nine or 10 months ago when [Mr Bush's] package was put together. President-elect George W. Bush is already looking at some, perhaps, some changes, for instance, making some of it retroactive. He is focused now on trying to make sure that it is positive for the economy.'

President-elect George W Bush intends to implement tax cuts across the board as one of his foremost priorities but the possibility of a capital gains tax cut is unlikely.

The Democrats have indicated that they would be opposed to such a measure. A spokeperson for Senate Democratic leader Tom Daschle said: 'There are other places we need to focus our attention.' Furthermore, comments from Mr Bush's administration also reveal a reluctance to reform the capital gains tax. Ari Fleischer, a spokesman for the president-elect, said Mr Bush will continue to concentrate on his own proposals which largely address income tax.

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