|
Capital Formation Newsletter
June 1999, Vol. 24, No. 4
ACCF Leads Efforts for 1999 Pro-Growth Tax Policy
Initiatives
ACCF Testifies Before Ways and Means Committee
The Media Focuses on ACCF Studies
ACCF Leads Efforts for 1999 Pro-Growth Tax
Policy Initiatives
Ways and Means Chairman Archer Releases ACCF Research at June
16 Hearings
ACCF is involved in all the major capital formation initiatives
in this Congress, be they Democrat or Republican, and is recognized
by major players for its key role in the 1999 tax debate.
To help shape this year's tax debate, ACCF is promoting pro-growth
tax initiatives through its research, publications, testimony, and
congressional and media briefings. ACCF stresses that both history
(the Kennedy-Johnson tax cuts of the 1960s and the Reagan cuts of
the 1980s) and sound economics suggest that a significant portion
of any reasonable multi-year tax cut should be dedicated to saving
and investment initiatives. ACCF's recent testimony as an invited
witness before the House Ways and Means Committee lays out a menu
of tax initiatives for individuals and business that would promote
competitiveness, economic growth, and retirement security. (See
enclosed ACCF testimony.) As the following illustrates, policymakers
and the media look to ACCF to make the intellectual case for tax
measures to stimulate saving, investment, economic growth, and job
creation.
Excerpts from the Chairman's opening statement:
"On the death tax, the research shows that of 24 major industrial
countries, only Japan's top death tax rate of 70 percent is higher
than the 55 percent rate in the United States. Fifty-five percent
is way too high. No American-no matter their income-should be forced
to pay the government up to 55 percent of their savings when they
die, and that's why we should significantly reduce if not eliminate
the death tax, and I ask my Democratic colleagues to work with me
to do that.
"The second study is equally disturbing, because it underscores
the one problem that Federal Reserve Chairman Alan Greenspan and
most economists agree is a major cloud on our economic horizon-our
negative personal savings rate. As we have learned through our Social
Security debate, retirement is a three-legged stool of personal
savings, pensions, and Social Security. We know that Social Security
is facing serious problems. What makes that problem even more serious
is that the other legs of that stool-personal savings and pensions-are
weak and are being weakened further by the tax code."
Key Ways and Means Committee Members Brief ACCF Supporters
On June 17, Representatives Jennifer Dunn (R-WA) and John Tanner
(D-TN), lead advocates of "death tax" elimination in the
U.S. House of Representatives, visited with ACCF supporters and
expressed their appreciation for ACCF's survey of death tax rates
in 24 countries and its analysis of the economic impact of death
taxes. (See special report on ACCF's international survey of death
taxes.)
“Continued strong growth in the entrepreneurial
sector depends upon bright people having access to capital. The
ACCF's death tax study brings a new perspective to the negative
impact of this tax on entrepreneurship.”
-- Rep. Jennifer Dunn (R-WA)
“The new Holtz-Eakin study provides
conclusive evidence that the inherently unfair [death] tax places
a significant burden on U.S. labor and employment growth.”
-- Representative John Tanner (D-TN)
ACCF Testifies Before Ways and Means Committee
On June 23, ACCF president Mark Bloomfield and senior vice president
and chief economist Margo Thorning testified as invited witnesses
before the House Ways and Means Committee. ACCF recommended a menu
of tax cut options that, taken together or singly, could enhance
competitiveness, increase economic growth, and promote retirement
security.
Sound tax cuts for individuals include: increasing the deductible
IRA contribution limit and/or raising the income level; repealing
the death tax; providing a tax-free "rollover" for reinvested
savings; reducing the capital gains tax and providing an annual
exclusion for capital gains; increasing pension portability; establishing
"personal retirement accounts"; and providing a deduction
for dividends and interest.
Sound tax cuts for business include: phasing in expensing
for plant and equipment outlays; providing more favorable tax treatment
for investment to promote environmental goals; providing relief
from the corporate AMT; reforming the foreign tax provisions of
the U.S. tax code; reducing the corporate capital gains tax; and
liberalizing employer-sponsored pension plans.
Senators Hatch and Lieberman Release ACCF/DRI Study
On July 1, Senators Orrin Hatch (R-UT) and Joe Lieberman (D-CT),
authors of the 1997 capital gains tax cut in the Senate, held a
press briefing to release the ACCF/DRI analysis of the positive
impact of the cut. (See special report on the impact of the 1997
capital gains tax cut.) Participating in the press conference were
reporters from the New York Times, Wall Street Journal, Washington
Times, Barron's, Associated Press, and USA Today, among others.
“The DRI report is good news
for hardworking Americans who have chosen to save and invest in
their future. It confirms that a modest reduction in the capital
gains tax rate can help raise the living standard of all Americans
and fuel innovation in our economy, which is critical to sustaining
our prosperity. I thank DRI for its research and the ACCF for its
fine work in educating the public about the benefits of saving and
investment.”
-- Senator Joe Lieberman (D-CT)
“I was pleased to work with ACCF
to make the 1997 capital gains tax cut a reality. The new DRI
economic analysis proved it worked. This kind of tax relief benefits
all Americans. We need to continue pushing for tax policies to
promote saving and investment.”
-- Senator Orrin Hatch (R-UT)
ACCF Study Supports Senator Kyl's Death Tax Repeal Bill
On July 2, Senator Jon Kyl (R-AZ), author of the Kyl-Kerrey death
tax elimination bill in the Senate, commented on ACCF's new analysis
of the negative economic impact of the death tax, "The Death
Tax: Impact on U.S. Capital Accumulation and Entrepreneurship."
Senator Kyl said, "The study's conclusion—that U.S. GDP
was $106 billion lower in 1998 because of the distorting effects
of the death tax—fuels my conviction that repeal of this tax
should be a top priority for this Congress."
The Media Focuses on ACCF Studies
From the Washington Post Op-Ed Page:
Robert Rubin, the most widely celebrated secretary of the Treasury
ever, left office Friday insistent that cutting capital gains taxes
is a venture in futility. But as Rubin returned to New York, a mainstream
economic analysis showed he is wrong.
The study by Standard & Poor's DRI service confounds the Clinton
administration bias that survives Rubin's departure. It found that
the bipartison 1997 Hatch-Lieberman cut in the capital gains rate
from 28 percent to 20 percent lowered capital costs for new investment,
promoted start-up businesses and entrepreneurism, helped elevate
stock prices and made life better for the ordinary American.
Robert Novak
July 5, 1999
----------------------------
From Investor's Business Daily:
Study: 1997 capital gains tax cut spurred more growth, investment
The cut in the top rate to 20% from 28% increased business investment,
economic growth and stock prices, according to a report prepared
for the American Council for Capital Formation.
July 2, 1999
----------------------------
From the Wall Street Journal Editorial Page:
We'd also encourage Senators Joe Lieberman and Orrin Hatch to return
to the capital gains gold mine. According to a new study by David
Wyss of Standard & Poor's DRI, their capital-gains tax cut to
20% was a big economic winner. Mr. Wyss, who is no conservative,
estimates that the cut will raise net business investment by 1.5%
a year. He also figures it's responsible for about one-fourth of
the 30% increase in stock-market prices since the law passed.
June 30, 1999
----------------------------
From the Wall Street Journal:
[A] study released by the American Council for Capital Formationcontended
that capital gains rate cut enacted in 1997 has lowered the net
cost of capital for new investment in the U.S. by about 3%.
July 2, 1999
----------------------------
From syndicated columnist Bruce Bartlett:
At 55 percent, the top estate-tax rate in the United States is
among the highest in the world. According to the American Council
for Capital Formation in Washington, among major countries, only
Japan has a higher top rate, and it applied to estates of more than
$15.3 million, whereas the top U.S. rate hits at just $3 million
of assets. Even many countries with governments much more to the
left than ours have estate taxes that are significantly lower.
Washington Times and Dallas Morning News, June 28,
1999
|
