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Controversy Increases over Gains Tax Hike

September 14th

tax hikeAs President Obama and the Republican candidates gear up for the 2012 presidential primaries, debates among candidates are getting increasingly heated. Most notably, the field has been split over the issue of taxing capital gains. While five Republican presidential candidates are currently on the record in support of eliminating taxes on capital gains, President Obama and his supporters currently seek increases.

Recently, Utah Governor Jon Huntsman became the latest Republican candidate to argue for a zero tax rate on capital gains and other income from investments.

He proposed the idea last week as part of a comprehensive job-creation plan that, he claims, includes an overhaul of the tax system.

Huntsman and other like-minded candidates favor reduction of capital gains taxes as a means of helping American taxpayers to avoid raising crippling tax debts. They claim that increases could hurt taxpayers who already struggle with unpaid taxes and worry about being able to cope with higher bills. They also claim that a zero capital gains rate would attract investment in the United States.

Capital Gains Tax Increase in the Future?

On the other side of the issue, President Obama and his supporters favor increasing the capital gains tax, which coincides with current bipartisan debt-reduction efforts. Debt reduction committees over the past year have argued for reducing tax on ordinary income, while taxing capital gains and wage income at the same rates.

Specifically, the President favors an increase in capital gains taxes for the most wealthy. This position is supported by individuals such as billionaire Warren Buffett, who claims that lower rates, as proposed by the Republican candidates, give wealthy Americans an undue advantage.

At present, the capital gains tax stands at 15 percent for most assets held for a period of more than a year. The last major overhaul of the U.S. tax code in 1986, equalized the maximum capital gains and standard income tax rates at 28 percent. The current changes being proposed would be the first significant alterations to the capital gains tax policy since the 1986 decision.


 
 
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