The 2003 Tax Cut: Proposals and Issues Page: 35 of 36
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CRS-32
Prior Law President's Proposal House Senate Finance P.L. 108-27
Capital GainsThe capital gains upon sale of long-
term capital assets (held more than
12 months) were taxed at 20%
(10% for taxpayers in the 10 and
15% income tax brackets).
For assets held more than 5 years,
beginning with ownership after
December 31, 2000, the maximum
rate was 18% (8% for lower
brackets).The President's "tax integration"
proposal to eliminate the double
taxation of dividends would have
effectively eliminated the tax on
capital gains by allowing
shareholders to adjust their basis in
computing their capital gains.
Therefore, prior to the sale of a
stock, corporate income that was
previously taxed would not have
been subject to capital gains tax at
the individual level.
Estimated revenue loss: The Joint
Committee on Taxation did not
separate the revenue loss from the
revenue loss attributed to the
elimination of the tax on dividends.The proposal would have reduced
the 20% and 10% tax rates
applicable to capital gains to 15%
and 5%, respectively.
The provision would have begun in
2003 and expired after 2012.
Estimated revenue loss: $990
million for FY2003 and FY2004;
$31 billion over 11 years.No provision.
The law reduced the 20% and 10%
tax rates applicable to capital gains
to 15% and 5%, respectively.
This provision began in 2003 and is
scheduled to expire after 2007.
In 2008 only, the applicable rates
will be 15% and 0%, respectively.
Beyond 2008, the tax structure will
revert to prior law.
Estimated revenue loss: $1 billion
in FY2003 and FY2004; $22.4
billion over 11 years.
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Brumbaugh, David L. & Richards, Don C. The 2003 Tax Cut: Proposals and Issues, report, July 16, 2004; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc855800/m1/35/: accessed July 17, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.