Burchett / 6 Senator Sulymankhel

S.W._____

A BILL
To lower capital gains tax and corporate tax to stimulate the US economy and provide growth.
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Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE
This act may be cited as the Capital Protective Act of 2015.
SECTION 2. FINDINGS
Congress hereby finds and declares that,
1) Lowered rates would increase the size of the economy by 6.1 percent in the long run.
2) Obama's capital gains tax hike would decrease employment by 134,579 economy by 0.8 percent, or 142 billion
dollars, per year.
3) Economically the middle class is significantly affected by capital gains tax; this is considered one of the most
crucial sources for our economy.
4) The large boost to the size of the economy from a corporate tax cut comes from a lower cost of capital.
5) Proven by historical data, lower corporate tax rate encourages investments.
6) The United States leads the world with a 40 percent tax rate.
7) Lower corporate tax is able to provide companies with the ability to pay their workers more.
8) The increase in corporate tax has caused a decrease in corporate philanthropy.
9) Lower capital gains tax can increase natural (non-algorithmic) market liquidity.
10) The upper class tends to buy less during high taxes which leads to a decrease in stock value.
SECTION 3. STATUTORY LANGUAGE
A) The Capital Protective Act of 2015 shall lower the tax rates for both the corporations and the investors. The rate
should be at 4 percent for the investors which in return will stimulate the economy and investments with liquidity for
the markets. The lowered rate shall hereby apply to stocks, bonds, options, and futures contracts. Any person who
exercises market activity with either the buying or selling of options, bonds, stocks, or futures is subject to reporting
their gains to the Internal Revenue Service (IRS). The tax rate for corporations shall be lowered to 10 percent in an
effort to retrieve multiple American companies from offshored locations. Thus would promote the United States as a
leader in capitalism and would encourage other foreign countries to offshore here. All revenue from tax shall be used
appropriately by the United States' government to stimulate the economy. The revenue collected by the IRS will be
parted into 3 packages; each portion shall hold 33 percent of the tax revenue collected. The first package shall be
used on reconstruction of infrastructure which will employ many Americans for the task and will stimulate three
sectors that have been found crucial to a thriving economy- the material goods sector as well as the transportation and
consumer services sector. The second package shall be granted towards healthcare to assist funding for health
insurance for low income families and Americans over the age of 65. The final package shall be given to the
Department of Defense in an action to support all future military operations in the current Middle Eastern turmoil.
Revenue shall be used effectively for funding of the National Nuclear Security Administration; After nuclear
stockpiles, capital from revenue shall be distributed to DynCorp, Triple Canopy, and ACADEMI for future expected
military exercises conducted in Syria and Iraq in an effort to suppress the Islamic State of Syria and Iraq.
B) The Capital Protective Act of 2015 must be protected by the IRS and shall be enforced with precise measures in
order to distribute the most accurate amount towards all three packages of the act. The IRS will maintain current level
of funding.
C) Any corporation that is either offshoring on U.S. territory or originates from the United States is subject meeting
the tax rate stated in this bill. Any corporation that fails to meet this requirement enforced by the Internal Revenue
Service is subject to paying an increase of 5 percent on top of the normal 10 percent rate. For U.S. citizens who have
made a net positive return on their investments in the options, stocks, bonds, or futures markets and fail to report to
the IRS are subject to paying 50,000 dollars and a one year ban from buying or selling any financial packages in the
bond, stock, options or futures market. This act shall be enacted by January 5th of 2015.

United States has been the largest economy in the world for over 100 years. Not too long ago the Chinese took that ranking from the
United States. This was a historic event in which has been considered a signal of our weakening economic growth and certain

apprehensions of the future. The competitiveness in the international markets draws the attention of our Federal Reserve committee
and Washingtons. The Chinese are devaluing their currency against our dollar due to their overly leveraged market which has
increased their exports. In their most recent reports they have released strong GDP values and a large trade surplus due to a lack of
imports in the recent quarter. Through manipulation of currency and trade they have posed a threat on the global stage against the
United States. In what way can we strengthen our presence economically to the Chinese? How do we become once again the largest
economy in the world?. This nation has a dangerous gap between the rich and the poor. The most crucial portion of a thriving
economy is the middle class in which we are depleting as the top 1% become wealthier and the rest of the country becomes poorer.
Clearly, high taxes on the 1% have not made a difference on the concurrent growth of income inequality. With a lack of a middle
class we are risking our economy and all other major economies of Europe and Asia; possibly facing a global economic slowdown.
Two key tax rates have been an obstacle in the way of solving these issues that appear in front of congress today. Corporate and
capital gains tax hold unnecessarily high rates that brush away rather than lure the investors and corporations. Reforming both rates
to a lower value will stimulate the economy by attracting investors, resolving employment issues, and increasing tax revenue. To
stimulate our economy we need to attract the people to invest in what is considered the more riskier asset class of financial
products- stocks, corporate bonds, and mortgage-backed securities. Simply by lowering the capital gains tax rate you can come to
discover the population rise of investors in the the markets. Stock prices will rise and so will the consumer wealth. The low rate
will encourage spending and help corporations grow larger. Other than the stock market, the corporate bonds and mortgage rates
would fall in value, which would drive investments higher and housing prices lower towards a more affordable bracket. Over the
past 40 years, the average holding period for U.S. equities has changed from 7 years to 7 months (all forms of investor groups) in
what we call short-termism (Salter). Any stock held longer than 365 days is considered a long-term investment to the IRS and is
taxed substantially lower. However the average holding period is now 7 months which proves that capital gains tax rate discourages
the majority of the market. The people cant comply with the high tax rate when the populations general tendency of buying and
selling falls under a different tax bracket. To compromise we must lower the tax rate to encourage the the new style of investors to
place their capital in U.S. equities. In order to obtain market efficiency, transaction costs should be kept at a very low rate (NYU
Stern). Many traders take in consideration the bid and spread of a security that is traded at an exchange. More than 90% of market
liquidity comes from high-frequency trading firms which then leaves large spread, low volume stocks to decrease in value. To lower
the tax rate and bring more investors can provide opportunities for traders who want to exercise the security and help it grow in size
accordingly with the market pace. This will help a major portion of smaller companies survive the harsh competition within the
markets. With more investments in riskier assets, people can buy more real estate and companies can avoid laying off employees
and cutting salaries. The corporate tax rate has forced many companies to offshore and domestic ones to suffer. Unemployment is at
historic lows however that is not the issue with our job market. The issue is the gap or income inequality between the rich and the
poor. The minimizing middle class has merged into the lower class of our income bracket. Comparing household incomes from
select percentiles show that income inequality has increased dramatically since 1999 (D. Proctor). The middle class which is now
considered gone by many, has suffered due to a broken tax e world with the highest corporate tax rate of 40% (Brookings.edu). This
fearful rate causes some of the largest corporations to move offshore for tax purposes. We have no competitive edge against some of
the low-tax countries, we cant get them back into the United States unless we lower our rate to a value that can prove strong against
foreign rates. Companies look for every chance they get to cut cost; these rates push them away and give them the advantage of
moving overseas to where labor is cheap and so it tax.Taxes are crucial to an economy and there are two options to raising tax
revenue, high taxation -which doesnt work due to loopholes- or by low taxation and an increase in corporate revenue across many
more corporations. If you attempt to tax these large companies such as Google and Apple, they will only use one of many loopholes
to avoid taxation. To provide room for growth in an economy we must have a healthy tax revenue to thrive off of. 27.49% of tax
revenue goes towards the health care program and another 25% goes into the defense budget (Your 2014 Taxpayer Receipt). Tax
revenue is key to fulfilling programs and services such as those two. Both healthcare and defense require an overwhelming amount
of capital to maintain, unfortunately our tax revenue is not strong enough. With lowering the tax rate to a competitive level, we
attract foreign companies to move over here to the United States. This will also encourage our offshoring large-capital companies to
take their parked money back into the United States. Evidence shows high federal taxes discourage the creation of small businesses
and impede on old ones (Duke.edu). Small businesses make up a large portion of our private sector. Tax revenue should not
completely focus on large corporations only. We must consider how beneficial the small businesses can assist the domestic economy
if we motivate people to start up their own. Unfortunately the people are discouraged of the risk of failing a business as the
risk/reward of starting one is not very attractive with a high corporate tax.