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Capital-gains Tax Issue

This research explores the capital-gains tax issue in the United States. The major controversy concerns whether or not to reduce the tax rate on capital-gains to some level below that for ordinary income, which is the basis for the taxation of capital-gains under the Tax Reform Act (TRA) of 1986. Although the proposal by the Bush Administration to reduce the tax rate on capital-gains was defeated in the Senate in the fall of 1989, the issue remains very much alive (Yang, 1989).

The nation's media generally and the Bush Administration more specifically have attempted to portray the controversy over the capital-gains tax as a liberal/conservative clash. Such a depiction suits the Administration, because, as was true of the Reagan Administration which preceded it, it hopes to make points with the public by avoiding a discussion of hard facts, and, instead, deal with the issue on an emotional level where it can blame all of the nation's troubles on evil liberals and socialists. That intellectual giant and stalwart defender of the conservative cause, Representative Bob Dornan (1990), R. Cal., has been kicking the dead socialist horse as hard as he can on the capital-gains tax issue, in defending the Administration's position on the floor of the house.

In point of fact, arguments on the capital-gains tax issue cut across liberal/conservative lines, to a point where an attempt to assess the issue strictly in terms of American liberal and conservative political ideologies tends to obfuscate the points of contention (Birnbaum, and Rogers, 1989). A more effective assessment of the issue may be obtained through a consideration of the arguments on their merits, without invoking liberal and conservative bogeymen from America's political closet.


There exists a wide variety of arguments both in support of and in opposition to proposals to reduce the tax rate on capital-gains. Many of...

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Capital-gains Tax Issue. (1969, December 31). In Retrieved 02:13, February 25, 2017, from