Eliminating The Capital Gains Tax

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Term Paper Title	Eliminating The Capital Gains Tax
# of Words	748
# of Pages (250 words per page double spaced)	2.99

Eliminating The Capital Gains Tax

Eliminating The Capital Gains Tax

     One of the major obstacles facing all entrepreneurs in the United States
when starting a new business or expanding an existing one is raising capital.
Here capital refers to money that people invest in a business.  Investment and
entrepreneurship are the heart and soul of a lively economy.  There is no other
economic task more important than investing one's capital into new ideas and new
enterprises.  Therefore capital raised from one person or a group of
professional investors remains a crucial source of funding for these type of
enterprises.  In the type of economic world which is present today the
opportunity for good returns on a person's money must be in abundance to allure
investments in such ventures. Capital gains taxes significantly diminish these
returns, therefore reducing the incentives to invest.  Eliminating the capital
gains tax will spark entrepreneurship and new investments in the economy, which
in turn will elevate economic growth and increase the number of jobs.  In order
to stimulate economic growth in the United States, taxes on capital gains should
be eliminated.
     Members of Congress once considered a reduction in the capital gains tax
rate from 28% to 19.8%.  Combined with indexation, which is
,
reducing the capital gains tax by any amount would be a vital pro-growth  step
taken by Congress.  However, given the fickle and high risk nature of
investments and entrepreneurships, and the importance of maintaining a
competitive economy in a global environment, capital gains should be exempt from
taxation altogether.  A zero percent capital gains tax would attract
entrepreneurial risk taking, which is very important to economic growth.   It
would entice wealthy investors to invest in a certain enterprise, which in small
numbers would immensely increase the economic growth in the United States.  In
the Wall Street Journal the U.S. Commission on civil rights said, "Reducing the
tax on capital gains effectively increases the flow of financial 'seed corn' to
budding entrepreneurs." Also, from a global perspective, the United States has
one of the biggest capital gains tax rate.  Depending on inflation, sometimes
the United States has the largest capital gains tax rate in the world.  In a
competitive global economy a zero percent capital gains tax rate would make the
United States a haven for capital, which in the...

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