Dreier Testifies Before Ways & Means Committee
Promotes Capital Gains Proposal and Homeland Investment Act

March 11, 2003

WASHINGTON, DC - Congressman David Dreier (R-CA), Chairman of the House Rules Committee, testified before the House Committee on Ways and Means today on behalf of his proposals to create economic growth and promote investment in capital markets. Dreier expressed full support for President Bush's jobs and growth package and suggested his proposals could improve an already sound plan.

"While I fully support the President's plan, I believe that we can do even more to boost the economy and create jobs for Americans," Dreier said. "One of the most effective ways to boost business expansion, create jobs and bring individual investors back into the markets - to grow the economy - is to immediately target capital investment. Legislation I have introduced, the Investment Tax Incentive Act, would do just that."

The Investment Tax Incentive Act, H.R. 44, would create a two-year window in which assets purchased would receive a reduced capital gains rate at the time of their sale. The rate would be reduced from 20-10 percent for individuals and from 35-20 percent for businesses. The bill requires a one year holding period before the assets can qualify for the lower rates. According to a Joint Tax Committee score, H.R. 44 would boost revenues to the federal treasury by $100 million in the first year and $600 million in the second. An analysis of the legislation by The Heritage Foundation suggests that the legislation will add over 1 million jobs and over $180 billion in new business investment in the two year period created by the bill.

Dreier pointed to these scores as proof that reducing the capital gains rate not only helps spur economic growth, it also increases the resources the federal government has to eliminate deficits and meet other needs such as national security, education, and health care. "Like the last time we cut the capital gains rate in 1997, a faster growing economy and increased investor activity will quickly put to rest any arguments that such a move would cut revenue."

Dreier also testified in support of the Homeland Investment Act, H.R. 767, introduced by Congressman Phil English (R-PA). Dreier is an original co-sponsor of the legislation that would reduce for one year the tax rate on foreign earnings gained by American companies to 5.25 percent. Currently, U.S. firms operating overseas are taxed at 35 percent when they invest in the domestic market. Dreier said this legislation would lure critical investment back home and potentially infuse $135 billion into our economy in just one year.