What Steiger Would Do

Would the Steiger amendment benefit chiefly the rich, as the President says? Not really.

Undeniably, a cut in the capital gains tax below the present top rate of 49% would help mainly people in (or above) the 50% tax bracket, who are more likely to own stock and other assets. To be in that lofty bracket, one needs taxable income of about $40,000 or more. But a lot of "average" taxpayers leap into the higher brackets a few times in their lives--when they sell a house, a farm, or the stock that Aunt Tillie left them; or when they collect profit-sharing or stock-purchase funds from their employers. For them the benefits of Steiger could be significant. Examples:

> A couple in their late 50s earning $15,000 a year rent an apartment and sell their 20-year-old home, realizing a capital gain of $34,000. Now, they would pay a tax of $7,709 on their total income. That would drop to $6,659 under Steiger's plan, a saving of $1,050.

> A family that earns $25,000 a year sells its stock in a dry-cleaning business for a $55,000 capital gain. At present the family's total tax would be $17,655; with Steiger, it would drop to $15,030, a saving of $2,625.

> A cabbie with income of $15,000 a year sells his taxi medallion for a profit of $50,000. He also sells stock for $10,000 more than he paid for it. His tax total now would be $14,420; under Steiger, it would be $3,000 less.

In short, the President was misleading when he thundered that the Steiger amendment would scarcely yield "two bits for the average American." Many "average" Americans have found that inflation has sent the price of their property way up; but the real value of the dollars that they collect upon selling it has gone way down. Thus it seems only fair to reduce the tax bite on capital gains. If those taxes are eased, many people who have been holding on to their property may be inclined to sell. Then everybody would benefit: the sellers would pocket profits, on which they would pay taxes, and the Treasury might well wind up with more revenue than it would otherwise collect.

This file is automatically generated by a robot program, so viewer discretion is required.