THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, July 17, 1994 TAG: 9407150036
SECTION: COMMENTARY PAGE: J4 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 57 lines
Amid all the moaning and groaning of the political class and many voters about the poor quality of choices available in the race for Virginia's U.S. Senate seat, there are, believe it or not, some serious issues being discussed. One of the most intriguing came last week from independent candidate J. Marshall Coleman: Cut the capital-gains tax.
As part of a detailed tax package he says he will release later in the fall, Coleman says he will propose a capital-gains tax cut, along with repealing the retroactive tax enacted (with Sen. Chuck Robb's support) by President Clinton. He also calls for enacting the middle-class tax cut promised by President Clinton during his campaign and abandoned in favor of middle-class tax increases as soon he crossed the White House threshold.
Of course, eliminating the federal tax on capital gains altogether would be even better. (Japan has no tax on such income.) What is interesting about Coleman proposing a capital-gains tax cut is that he is doing it in the face of the demonization of the idea that was practiced very successfully by national Democrats in 1989. President George Bush pushed for such a cut during his first year in office and got it through the House Ways and Means Committee. But Senate Majority Leader George Mitchell, knowing its potential for reviving an economy that was heading toward recession, killed it in the Senate.
``Fairness'' was Senator Mitchell's cry, charging that cutting the capital-gains tax would benefit only ``the rich.'' So the 28 percent federal tax on capital gains remains in place. Combined with state taxes, any Virginian taking advantage of capital gains now faces an effective rate of close to 40 percent.
Maybe the canard about the ``rich'' might have been true 50 years ago, but one thing the age of mutual funds has taught us is that capital gains aren't just for the rich anymore. Those who have withdrawn money from mutual funds have discovered that they get socked with capital-gains taxes on their withdrawals. What about people who work hard to build up a barber shop or a VCR repair store and then sell it? They get hit as well.
Senator Robb, of course, voted for higher taxes, not lower ones. L. Douglas Wilder held the line on higher taxes as governor but has said little about taxes on the federal level. Oliver North opposes higher taxes but hasn't said much about specific tax cuts.
From the look of the polls, perhaps Coleman believes he has little to lose. If so, he might come up better than he thought. Had he stuck to bread-and-butter issues like this one when he ran for governor in 1989 instead of attacking Doug Wilder as the rapist's best friend, maybe he would have won. ILLUSTRATION: Photo
MR. COLEMAN
by CNB