Democratic presidential front-runner Hillary Rodham Clinton on Friday proposed resurrecting tax policies from the time of her husband, former President Bill Clinton, that she promised would promote long-term investments and build a stronger economy.
Mrs. Clinton’s plan would replace the current two-tiered tax on capital gains — the profit from selling stock or other assets — with a six-year graduated rate that penalized wealthy investors for selling too early.
“This means from the moment investors buy into a company they’ll be more focused on its future growth strategy than its immediate profits. And so will some of its executives who are paid in part with stock or stock options,” she said in a speech at the New York University’s School of Business.
The reform of capital gains taxes was part of Mrs. Clinton’s broader agenda that she says will prod business and Wall Street to look beyond quarterly earnings reports and behave in ways that are better for American’s long-term economic health.
“American business needs to break free form the tyranny of today’s earning report so they can do what they do best: innovate, invest and build tomorrows prosperity,” she said.
The plan immediately came under fire from Republican presidential candidate Sen. Marco Rubio of Florida.
“With tax policy nearly identical to what we had in 1997, Hillary Clinton is stuck in the outdated policies of yesterday,” said Rubio campaign spokesman Alex Conant. “Just like we saw in the ‘97 hit flick ‘Titanic,’ Hillary Clinton’s tax proposal picks winners and losers, and ultimately leaves behind the working class. Marco Rubio will modernize our tax code to create more good paying jobs and help middle-class families in the 21st century.”
Capital gains are currently taxes at two rates, a top rate of 43.4 percent for investments held less than a year and 23.8 percent for anything beyond a year.
“That may count as long-term for my baby granddaughter but not for the American economy,” Mrs. Clinton said. “It’s no way to run a tax system, so as president I would move to a six-year sliding scale that provides real incentives for long-term investments.”
Her proposal, which resembles the capital gains tax rates adopted in 1997 by Mr. Clinton, would treat capital gains as ordinary income for the first two years for taxpayers in the top bracket, subjecting it to the top rate of 43.4 percent.
After two years, the rate would decrease gradually over four years until it reached the current rate of 23.8 percent, Mrs. Clinton said.