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Capital Gains Tax Rates and Revenues, April 4, 2007 1 (April 4, 2007)

handle is hein.tera/crstax0041 and id is 1 raw text is: Order Code RS20250 Updated April 4, 2007 ACRS Report for Congress Capital Gains Tax Rates and Revenues Gregg A. Esenwein Specialist in Public Finance Government and Finance Division Summary The taxation of individual capital gains income is a perennial topic of debate in Congress. Taxes on long-term capital gains income were reduced in 1997 and again in 2003. The holding period to qualify for long-term capital gains treatment was reduced in 1998. This report provides historical information on the holding period, maximum statutory tax rate, and revenues from the taxation of individual capital gains income. This report will be updated as legislative action warrants or as new data become available. Since the enactment of the individual income tax in 1913, the appropriate taxation of capital gains income has been a perennial topic of debate in Congress. Almost immediately upon enactment, legislative steps were initiated to change and modify the tax treatment of capital gains and losses. Since 1913, at least twenty major legislative changes and countless minor changes have been enacted. Capital gains tax rates were last reduced in 2003 while the holding period to qualify for long-term capital gains treatment was reduced in 1998.1 In May 2003, the 108th Congress passed the Jobs and Growth Tax Relief Reconciliation Act of 2003. Under this act, the maximum tax rate on long-term capital gains income was reduced to 50% (0% for tax years after 2007) for taxpayers in the 10% and 15% marginal income tax brackets. The maximum capital gains tax rate was reduced to 15% for taxpayers in marginal income tax brackets exceeding 15%. The act also repealed the special capital gains tax rates for assets held five years or longer. These changes were originally effective for assets sold or exchanged on or after May 6, 2003, and before January 1,2009. The Tax Increase Prevention and Reconciliation Act of 2005 extended these lower rates through December 31, 2010. See CRS Report 98-473, Individual Capital Gains Income: Legislative History, by Gregg A. Esenwein. Congressional Research Service -f-! The Library of Congress Prepared for Members and Commitees of Congress

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