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Tuesday, February 10, 2009

The Capital Gains Tax Question

There’s lots of garbage being jammed into the so-called economic stimulus package that will do nothing to help the economy in the short run or long run.

Of course, there were some ideas proposed during the 2008 campaign that would provide some help.

The Wall Street Journal on February 10 asks a very important question:

One question we wish someone had asked President Obama at last night's press conference is this: Why doesn't his economic stimulus bill include his own campaign proposal to eliminate the capital-gains tax for small businesses? The House bill omits it entirely, and the Senate version offers a rate reduction to 7% from the current 14%, but only on investments made in the next two years. That lower rate would apply to less than 2% of all capital gains…

We'd prefer an across-the-board capital gains cut rather than a targeted reduction. But the proposal would at least signal some Democratic interest in encouraging businesses to take risks again -- the only way the economy is going to recover. So what happened?

Good points and good questions.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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