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Why Cut Capital Gains Taxes? Here’s Why

The following is taken from the “Annual Report on the United States Government,” a mailing to constituents by U.S. Rep. and House Policy Committee chairman Chris Cox, R-Newport Beach:

In early 1995, Congress announced its intention to cut the rate of tax on so-called capital gains. This tax applies to the sale of assets such as houses, stocks and mutual funds, as well as other kinds of productive investment. The House of Representatives succeeded in passing a capital gains tax rate reduction the following year, but President Clinton did not agree to this until 1997.

The federal government received 30% higher capital gains revenue in 1999 than in 1996, the last year before the capital gains tax rate was reduced from 28% to 20%. Capital gains revenue has increased every year since the tax rate cut took effect.

Congress passed legislation to further reduce the rate of tax on capital gains from 20% to 18%, but it was vetoed by President Clinton in September 1999.

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