Thursday, June 28, 2012
|Congressman Dave Camp (R-MI), Chairman of the House Committee on Ways and Means, and Senator Max Baucus (D-MT), Chairman of the Senate Committee on Finance, today announced that the Committees will hold a joint hearing to review the tax treatment of capital gains in the context of comprehensive tax reform. The joint hearing will take place on Thursday, June 28, 2012, in Room HVC-210 of the Capitol Visitor Center, beginning at 10:00 A.M.|
In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committees and for inclusion in the printed record of the hearing. A list of invited witnesses will follow.
The maximum capital gains tax rate currently is 15 percent, as compared to the maximum individual ordinary income tax rate of 35 percent. Absent Congressional action, the maximum statutory capital gains rate will increase to 20 percent on January 1, 2013, while the maximum individual ordinary income tax rate will increase to 39.6 percent. Beginning in 2013, however, an additional 3.8 percent tax will be imposed on net investment income earned by certain individuals. “Net investment income” includes, among other items, capital gains. Furthermore, the 2013 scheduled restoration of the “Pease limitation” on itemized deductions will impose a roughly 1.2 percent marginal rate on capital gains, bringing the top federal rate on capital gains to 25 percent in 2013.
With regard to the joint hearing, Chairman Camp made the following statement:
“The taxation of capital gains is one of the most widely discussed areas of our individual tax system, and it needs to be reviewed as part of comprehensive tax reform. With both the Ways and Means Committee and the Senate Finance Committee actively pursuing tax reform, it will be critical for Congress’s two tax-writing panels to continue working together closely. I look forward to having our two committees once again convene a joint hearing on tax reform for the third time this Congress to consider the issues surrounding the capital gains tax.”
Speaking about the upcoming hearing, Chairman Baucus said, “It has been more than 25 years since the last major tax reform occurred. The world has changed drastically in that time and America’s tax code hasn’t kept up. It’s time we had a tax code for the 21st century, one that can create jobs, spark innovation and expand opportunity. I look forward to working with Chairman Camp as we work on a balanced, common-sense plan to reform the tax code and create the jobs we need to improve our economy.”
FOCUS OF THE HEARING:
The hearing will focus on the taxation of capital gains in the context of comprehensive tax reform. It will explore several tax reform policy issues relating to the treatment of capital gains, including background on capital gains taxation and its history, the impact of the capital gains tax rate on investor behavior, the treatment of capital gains as compared to ordinary income, the revenue-maximizing rate on capital gains, the distribution of capital gains income across taxpayer income levels, and the types of assets eligible for capital gains treatment.