Congress to discuss reforming capital gains taxes
Jun 26, 2012
Leaders of the Senate and House committees charged with tax policy plan to hold a rare joint hearing on tax reform and the tax treatment of capital gains.
House Ways and Means Committee chairman Dave Camp, R-Mich., and Senate Finance Committee chairman Max Baucus, D-Mont., said that the committees will hold a joint hearing June 28 to review the tax treatment of capital gains in the context of comprehensive tax reform. Both committees have been holding a series of hearings on tax reform since last year, in most cases separately. They occasionally hold a joint hearing on matters of wide interest.
“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,” Camp said. “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.”
The maximum capital gains tax rate currently is 15%, compared to the maximum individual ordinary income tax rate of 35%. Unless Congress acts by the end of the year, however, the maximum statutory capital gains rate will increase to 20% on Jan. 1, while the maximum individual ordinary income tax rate will increase to 39.6%.
On top of that, beginning in 2013, an additional 3.8% 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% marginal rate on capital gains, bringing the top federal rate on capital gains to 25% in 2013.