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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: lurqer who wrote (10171)	12/9/2002 12:51:12 AM
From: Softechie	Respond to of 89467

Going back to trickle-down economic... O'Neill's Ouster May Spur Bolder Tax Cuts Sunday December 8, 6:06 pm ET By Adam Entous and Donna Smith WASHINGTON (Reuters) - Following the biggest shake-up of the Bush presidency, Republicans are considering a more ambitious economic stimulus package than first planned, including temporary capital gains tax cuts on new investments, congressional aides and lobbyists said on Sunday. ADVERTISEMENT The White House has been discussing with lobbyists and lawmakers an economic stimulus package that could total $300 billion over three years, sources said. President Bush has yet to name his new economic team, but the White House has made clear it expects the new Treasury Secretary to be a tax-cutting advocate who, unlike Paul O'Neill, will enthusiastically market the administration's stimulus package to Congress and the American people. Advocates of a capital gains tax cut say it would boost the stock market and improve consumer and investor confidence, greatly improving Bush's re-election chances in 2004. For months, fiscal hawks in the administration and Congress have warned Bush against proposing a stimulus package that would create bigger deficits, and it is unclear whether the president will be able to win enough support in the narrowly divided Senate to get every tax cut he wants. Democrats are also ready to jump on tax cuts they see as a sop to the rich, favoring cuts for the poor and middle class. But Republicans close to the administration say the Nov. 5 elections giving them control of Congress, and the replacement of O'Neill could create a window of opportunity to push through the more sweeping package sought by tax-cut advocates and the business community. Rep. David Dreier, a Republican from California and one Bush's closest allies in Congress, is working with other Republican leaders to draft legislation that would slash capital gains taxes on investments for three years. To avoid a selloff in stocks, the cuts would only apply to equities purchased after the tax cuts take effect. And the assets would have to be held for a year to be eligible for the lower rates. A SHOT IN THE ARM The proposal would slash capital gains tax rates from 20 percent to 15 percent for most people. For lower income investors the capital gains tax rate would drop from 10 percent to 5 percent. Capital gains tax rates for most corporations would temporarily fall to as low as 20 percent from the top corporate tax level of 35 percent. "It would be a shot in the arm to investors to move out of money markets and back into equities," one lobbyist said. Aides said Dreier, who heads the House Rules Committee, has discussed details of the proposal with the White House. But it was unclear whether it will be included in the stimulus package the administration plans to unveil in the coming weeks. Cutting capital gains would likely win support from Republican leaders in both the House and the Senate. Republicans are counting on the new Treasury secretary to have a "bold outlook" for stimulating the economy through tax cuts, said Stuart Roy, a spokesman for Rep. Tom DeLay, a Republican from Texas. O'Neill, who was forced out by Bush, had expressed doubts about the need for a broad-based stimulus package, undermining other senior advisers who feared a jobless recovery and argued the economy needed an immediate shot in the arm. "The stimulus package is incredibly important and O'Neill wasn't on board. We want to hit the ground running with the new Congress, and it's obviously going to be more favorable with a fresh start" at Treasury, a source close to the administration said of the reshuffling. The White House and top Republicans in Congress have already signaled support for a reduction in taxes on dividends. Currently corporate income is taxed twice -- once as income and again when it is distributed to shareholders as dividends. Several other measures that would benefit businesses as well as investors are back on the agenda as well, including allowing firms to quickly write off more of their investments. Bush's stimulus is also likely to allow individual investors to deduct more of their stock losses. The measure may also raise the age at which 401(k) account holders must begin withdrawing from their retirement accounts to 75. Currently they must begin withdrawing six months after turning 70. The White House is also considering speeding up the scheduled increase in the per-child tax credit, a move that could help shore up support from moderate Republicans and win over some Democrats in the narrowly-divided Senate. Republicans have a narrow 51 to 49 majority in the Senate. They will need several Democratic votes to garner the 60 needed to overcome a vote-blocking filibuster.