Witnesses testified about U.S. tax policy and the capital gains tax rate in the context of comprehensive tax reform.
The maximum capital gains tax rate was 15 percent, as compared to the maximum individual ordinary income tax rate of 35 percent. Absent Congressional action, the maximum statutory capital gains rate would increase to 20 percent on January 1, 2013, while the maximum individual ordinary income tax rate would increase to 39.6 percent. Beginning in 2013, however, an additional 3.8 percent tax would be imposed on net investment income earned by certain individuals. "Net investment income" includes, among other items, capital gains. Furthermore, the 2013 scheduled restoration of the “Pease limitation” on itemized deductions would impose a roughly 1.2 percent marginal rate on capital gains, bringing the top federal rate on capital gains to 25 percent in 2013.