Ways & Means Hearing on Tax Reform and the Tax Treatment of Capital Gains

Congressman Dave Camp (R-MI), Chairman of the House Committee on Ways and Means, and Senator Max Baucus (D-MT), Chairman of the Senate Committee on Finance, announced that the Committees will hold a joint hearing to review the tax treatment of capital gains in the context of comprehensive tax reform.  The joint hearing will take place on Thursday, June 28, 2012, in Room HVC-210 of the Capitol Visitor Center, beginning at 10:00 A.M.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only.  However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committees and for inclusion in the printed record of the hearing.  A list of invited witnesses will follow.

BACKGROUND:

The maximum capital gains tax rate currently is 15 percent, as compared to the maximum individual ordinary income tax rate of 35 percent.  Absent Congressional action, the maximum statutory capital gains rate will increase to 20 percent on January 1, 2013, while the maximum individual ordinary income tax rate will increase to 39.6 percent.  Beginning in 2013, however, an additional 3.8 percent 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 percent marginal rate on capital gains, bringing the top federal rate on capital gains to 25 percent in 2013.