U.S. Rep. Chuck Fleischmann proposed a two-year moratorium on capital gains taxes this week, leveraging a key point of his jobs plan and suggesting an idea that would benefit him personally.
The government now charges individuals and corporations varying rates of tax on most capital gains, which are commonly obtained from the sale of stocks, bonds and property. If the House and Senate adopt his idea, the Chattanooga Republican said, the savings will be invested in people, not “buried in the backyard.”
“Once you get that capital in the game, it results in more jobs,” he said Friday in a telephone interview. “This allows average Americans — all Americans — to go out and take a risk with their capital.”
Fleischmann is one of those Americans. According to House financial disclosures filed last spring, the attorney and freshman congressman reported an investment valued between $500,001 and $1 million that included capital gains income.
Records show the investment returned a profit between $15,001 and $50,000 last year.
“It’s a very fair question, but I have never thought of my own financial situation one time in any of the 830 votes I’ve ever cast,” he said. “It just doesn’t enter my mind.”
In a news release announcing the legislation, Fleischmann’s office sought to downplay the wealthy-beneficiaries narrative, citing a National Center for Policy Analysis study that showed “more than half of all tax filers with capital gains had incomes of less than $50,000 in 2005.” The study examined the changes that took place after Congress and President George W. Bush lowered capital gains tax rates in 2003.
The National Center for Policy Analysis is a research organization that develops “private, free-market alternatives to government regulation and control,” according to its website.
Paul Smith, chairman of the Hamilton County Democratic Party, called Fleischmann’s proposal “voodoo economics.”
He said the congressman should focus on public-sector jobs projects such as repairing bridges and highways.
“We know who’s really going to benefit from this — this is all the millionaires ... who put money into his coffers,” he said.
Like other legislation that might pass the GOP-dominated House, Fleischmann’s proposal could have a difficult time getting through the Democratic-controlled Senate. In fact, a bill passed by Congress and signed by President Barack Obama last year calls for an increase in capital gains taxes starting in 2013, concluding years of Bush-era reductions.
Fleischmann, who represents Chattanooga within Tennessee’s 3rd Congressional District, said voters will endorse his proposal because of its simplicity, in contrast to the “complex and convoluted” tax code.
“Some skeptics might say it’s dead on arrival in the Senate,” Fleischmann said. “I think not. I think the American people are going to start holding us all accountable.”