Under a proposal backed by the National Association of Manufacturers (NAM) (www.nam.org) and other groups, the long-term capital gains tax, which has been at 35 percent since 1986, would be lowered to 15 percent.
John Engler, NAM's president and chief executive, said that with the economy being a hot topic in this year's president campaign, along with calls from both sides of the isle for an economic stimulus plan, the time is right for a proposal to cut the tax. "I think that this becomes very attractive if it's being explained in the context of what it means in terms of U.S. business activity being out of sync with the global situation, the global reality," Engler said. "There's a lot coming together here. It could be the perfect situation developing."
The manufacturers group argues that reducing the rate would get rid of a "tax wedge" that makes many business deals economically unfeasible and stops companies from investing the proceeds that they would have earned from the sales of assets back into their businesses.
The proposal did not make it into the House version of the economic stimulus plan, but the group said it expects legislation that would reduce the tax rate to be introduced next month.