79s - OPINION How We Beat the'70s By MARK BLOOMFIELD Page...

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OPINION How We Beat the '70s By MARK BLOOMFIELD March 13, 2008; Page A18 With rising oil prices, rising unemployment, and inflation eating away at the economy, a powerful politician pushes for a populist tax hike in Washington. It sounds a little like the current state of play. But the year was 1978, the push for a tax hike came from President Jimmy Carter, and the tax in question was on capital gains. Mr. Carter wanted to tax capital gains at the same rate as ordinary income -- effectively doubling the rate for many taxpayers. He didn't get his tax hike, but he did spark a pro-growth insurgency that reframed the tax debate. The chief insurgent was Republican Rep. Bill Steiger of Wisconsin, who called for cutting the top capital gains tax rate almost in half. From its inception, the 1978 "Steiger amendment" won bipartisan support. In the Senate, Democrat Russell Long (then chairman of the tax-writing committee), Alan Cranston (the second-ranking Democrat) and Republican Clifford Hansen signed up 59 Democrats and Republicans to co-sponsor legislation to cut capital gains taxes. Within weeks, political and popular support turned in favor of the tax cuts as more people acknowledged that lowering the rates would reward the middle class for saving and investing, not just "fill the pockets of fat cats." Soon the Carter tax increase morphed into a tax cut, bringing the top rate down to 28% from 50%.
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