Capital Gains Tax Cut Is 1990 Priority, Bush Says

President Bush said today that reducing the tax rate on capital gains will be a major priority for his Administration next year, setting the stage for another intense battle over the investors’ tax cut.

“When Congress reconvenes in the new year, cutting the capital gains tax rate is once again going to be one of the top items on my agenda,” Bush said in a speech to a Republican fund-raising luncheon here.

Capital gains are profits from the sale of assets, such as stock and real estate. They are now taxed like ordinary income at rates up to 33%.

Bush believes that lower tax rates would spur investment and create jobs, while some Democrats believe that the cut would be a gift for the wealthy.

Much of 1989 was occupied by a long, debilitating struggle between the White House and Capitol Hill Democrats over Bush’s zeal for the change.

Bush first proposed permanently reducing the capital gains tax rate to 15% from the maximum of 33%.

He later switched his support to a temporary, 2 1/2-year reduction to about 20%, followed by a return to previous rates with indexing to take account of inflation.

The proposal for a temporary reduction made it past the House but stalled in the Senate when Majority Leader George J. Mitchell made opposition a matter of Democratic solidarity.