Key Senator Backs Tax Cut

Prospects for a reduction in the federal capital gains tax this year improved sharply recently when Sen. Joseph Lieberman, D-Conn., joined Sen. Orrin Hatch, R-Utah, in sponsoring the Capital Formation Act of 1995.

The support of Lieberman, a moderate Democrat who chairs the Democratic Leadership Council, virtually guarantees that any tax legislation passed this year will contain a capital gains rate cut.

Taxes on gains on investments held more than a year would be cut in half for people in all tax brackets. Nonetheless, up to now most Democrats have denounced a capital gains tax reduction as a benefit for only the wealthy.

Lieberman refutes that charge:

“Anyone who has stock, who has money invested in a mutual fund, who has investment property, who has a stock option plan at work has a stake in capital gains relief,” he said. “That represents millions and millions of middle-class American families.”

A study of the nation’s 1,000 largest companies found that 310 offer companywide stock options or stock purchase plans to their employees. These companies alone employ more than 7 million people.