Cut capital gains - now!(capital gains tax should be reduced) (Column)

• Author: Schnepper, Jeff A.

ACCORDING TO the spring edition of the Internal Revenue Service's Statistics of Income Bulletin, issued June 7, 1995, total individual income taxes were $501,200,000,000 for 1993, passing the half-trillion-dollar mark for the first time. This was a 5.3% increase from 1992, when total income taxes were $476,000,000,000, and resulted in a large part because of higher marginal tax rates on upper-income individuals.

For 1993, the over-all average tax rate rose from 13.1 to 13.5%, up almost four percent. The Washington-based Tax Foundation predicts further increases. The Foundation recently released a study showing that Federal, state, and local governments are expected to collect more taxes in 1995 than ever before. Total tax collections for 1995 are projected to equal $2,183,000,000,000--5.7% more than 1994 and 30% above 1990.

Individual income taxes will make up about one-third of all tax receipts, at $719,000,000,000. Conducted by economist Patrick Fleenor, the study showed that the Federal government will take the largest bite--66%, or about $1,436,000,000,000. Yet, the Federal government never seems to have enough money.

In light of all of this, though, Congress is thinking of instituting tax cuts. The fact that members of our government are thinking in itself astounds me: that they actually have a good idea is absolutely amazing!

Members of the House Ways and Means Committee see a reduction in the taxation of capital gains as providing potential benefits to all individuals, not just the wealthy. They insightfully recognize that economic growth benefits every American. Cutting the taxes on capital gains reduces a disincentive for capital formation. More capital formation will promote greater corporate expansion, which, in turn, will provide ever-improving opportunities for families.

The Ways and Means Committee believes it is important that tax policy be conducive to economic growth. This can not occur without savings, investment, and the willingness of individuals to take risks and exploit new market opportunities. The larger the pool of savings, the more money there is available for business investment in equipment and research, so that the economy can increase output and productivity. More jobs are created and, through increases in productivity, workers earn higher real wages. Through greater savings and investment, all Americans will benefit from a higher standard of living.

The net personal savings rate in the U.S. averaged 4.8% of...