Senator Nickles Calls for Tax Relief

Senator Don Nickles (R-OK), assistant majority leader of the upper house and a member of the tax-writing Finance Committee, shared his views on the prospects for a balanced budget with ACCF supporters at a Capital Formation Forum breakfast meeting on April 23.

"As things stand today, the problems are principally on the entitlements side of the budget, especially in the Medicare area. We have to fix Medicare, either as a part of the budget package or separately. I also want to see entitlement reform and a real balanced budget," Senator Nickles observed.

The Senate assistant majority leader added that the Republicans will insist on tax relief because the country needs it. "The tax burden on the American people is too heavy," he said. "I think we can make changes that will promote economic growth and increase government revenues because the tax burden on the economy will be reduced. Our current level of taxation is holding us back."

"I want to change the law, not just make a statement," Senator Nickles said. "We could pass a tax cut bill but the real challenge is getting what we want in the package. The Administration has offered $100 billion in tax cuts but has also called for revenue offsets that result in a tax increase over ten years. I would like to see a package that includes a substantial reduction in capital gains tax rates, alternative minimum tax relief, and meaningful cuts in the inheritance tax enacted this year."

He emphasized that the impact of inheritance taxes on small business owners is particularly onerous and noted that he plans to introduce a bill to cut inheritance tax rates in the very near future. "My bill will be simple, fair, and understandable," he said.

Senator Nickles stressed that congressional and Administration policymakers must iron out a number of differences before they can reach a budget deal. Agreements on cost-of-living adjustments, the economic assumptions that support the budget estimates, and how to use any budget savings must be reached. "If we can have bipartisan support, we can come up with a good package," he said.

Senator Lieberman Advocates Balanced Budget

"Looking back on the 1996 election, which saw a return to the political center, you would think the message to Congress would be loud and clear: America needs a balanced federal budget and tax incentives to sustain economic growth," Senator Joe Lieberman (D-CT) told ACCF supporters at the March 20 Capital Formation Forum. "But in fact, policymakers have conflicting views on how best to achieve a balanced budget and whether to include tax cuts in the mix."

He observed that "our hopes for capital gains tax cuts or other saving and investment provisions are tied up in the budget process," and added that President Clinton has said that he would accept broad-based capital gains tax cuts. "If capital gains cuts are at the top of the Republican wish list, then I think there will be an opportunity to see capital gains taxes reduced this year," he noted.

Senator Lieberman is one of the principal sponsors of S. 66, the bipartisan Senate initiative for a broad-based capital gains tax reduction. Other lead sponsors of the measure include Senators Orrin Hatch (R-UT), Charles Grassley (R-IA), and John Breaux (D-LA). S. 66 calls for a 50 percent exclusion for the capital gains of individuals which results in a 19.6 percent maximum rate, a 25 percent corporate capital gains rate, a 50 percent exclusion and capital loss treatment on the sale of a principal residence, and a targeted investment incentive for small business.

A key member of the Senate Centrist Coalition on the budget in the last Congress, Senator Lieberman told ACCF supporters that the Coalition, which includes both Democratic and Republican senators, would work for a balanced budget again this year. Coalition members have been meeting with Senate leaders on both sides of the aisle to make their views known.

Senator Lieberman concluded by observing that resolving the budget really boils down to a question of what each side is willing to accept as a trade-off to get to a balanced budget. "The President and congressional leaders all want the budget resolved, but it's going to take real guts to get the job done," he said.

ACCF President Mark Bloomfield Testifies Before Ways and Means

At a hearing before the House Committee on Ways and Means on March 19 to examine the need for saving and investment tax incentives, ACCF President Mark Bloomfield, accompanied by ACCF Senior Vice President and Chief Economist Margo Thorning, appeared as a committee-invited witness. Mr. Bloomfield strongly advocated broad-based capital gains tax cuts to increase jobs and economic growth, benefit middle-class taxpayers, encourage entrepreneurship, and promote U.S. saving and investment.