Capitol Hill is abuzz with talk of a tax relief package for investors. President Bush has said his Administration is considering a variety of possible tax breaks that would give the stock market a boost and speed the pace of U.S. growth before the November congressional elections. Lawmakers are debating the pros and cons.
No decisions have been made, but key provisions under consideration as part of the Administration's package include the following:
- A reduction in the capital gains rate.
- An increase in the amount of capital losses that can be used to offset income (from $3,000 to $20,000).
- Removal of the double taxation of dividends.
- Acceleration of the contribution limits for 401(k) and other retirement savings vehicles.
House Republicans were already planning to consider in September a similar package to restore investor confidence in the stock markets. "We want to show the market and show the investor that Congress is bullish," said Greg Crist, spokesman for House Majority Leader Dick Armey.
Lawmakers are talking about increasing the age at which people must take distributions from 401(k) plans, company pensions, individual retirement accounts and most other retirement plans. Under current law, this age is 70Â½. Congressmen are proposing to increase it to age 75. The aim would be to give time to older people to rebuild their assets from hits to their retirement accounts from the stock market swoon.