Democrats have begun the effort to tax realized capital gains on the wealthiest Americans, with House Ways and Means Committee Chairman Richard Neal (D-MA) calling on the Senate Finance Committee to adopt legislation on the matter.
Under current law, capital gains can be taxed at ordinary income tax rates. New legislation proposed in the House would tax realized capital gains at the highest capital gains tax rate of 33 percent and subject holders of qualified dividend income to the highest ordinary income tax rate of 39.6 percent.
Democrats argue their efforts are long overdue, as capital gains have been exempt from higher income tax rates since 1934.
“Because of this exemption, anyone with ordinary income can receive millions or even billions of dollars each year in capital gains tax breaks they could never receive from salaries or wage income. This would change today by applying these capital gains rates to dividends paid from investment income and to capital gains from a sale of common stock,” Neal said.
Neal’s Democratic colleagues in the House applauded the effort.
“Without getting into the politics of this, it is also a matter of fairness. We should not be picking winners and losers, especially when it comes to how we spend tax dollars,” Rep. Maxine Waters (D-CA) said.
Vice President Mike Pence praised the House effort.
“We believe that under tax reform there will be a very deliberate balancing and strengthening of our capital gains system. And we will take steps to make certain that rich Americans pay their fair share,” Pence said.
All Democratic tax efforts in Congress have been met with quick pushback from the administration.
“It is crazy to increase taxes on companies that are creating jobs,” Mnuchin said on Fox Business’ Mornings with Maria Bartiromo last month.
Rep. Brendan Boyle (D-PA) was asked to respond to Mnuchin’s comments Tuesday on what the Democrats are proposing.
“He is wildly wrong,” Boyle said. “This is not about the rich.”
Boyle noted that the Republicans already brought in some of their own billionaires for an event at the White House last month, in addition to having Trump sing “Happy Birthday” to rap mogul Sean Combs.
“They bring billionaires into the White House to serve on legislation as well. To the hypocrisy of House Democrats, you may have to check that out for yourself,” Boyle said.
Congress is poised to take up major tax changes after the midterm elections.
After stopping work in August, the Senate has now returned to voting. Republicans have confirmed five members of President Trump’s Cabinet. They hope to take up the bill in the next few weeks.