Economics professors dabbled in the realm of politics Friday, showing enthusiasm for a new economic proposal submitted by Congressman Mike Pence.
Pence shared his proposal on campus Friday. His plan would simplify the codes regulating the capital gains tax. The capital gains tax is levied on the sales of an investment, including some homes or family businesses.
Most of the taxes, however, are earned on the sale of corporate stock.
Currently, Pence said, people pay between 8 percent and 28 percent on their capital gains. Most, however, pay about 18 percent. Pence said he hopes to reform it into a flat 10 percent.
"I've said on the floor of the Congress, 'Some say it is a tax cut for the wealthy.' I say it is. It's a tax cut for the wealthy. It's a tax cut for those who want to start their own business.
"Capital gain is tantamount to splitting the atom in the economy. (It) unleashes enormous amount of economic (energy)."
Pence's change could be a particular boon for Indiana's economy, said Pat Barkey, the director of economic and policy studies. He said the state's economy, with its large manufacturing base, is loaded with capital goods.
"Particularly business spending is very important for us," Barkey said. "People have trivialized it by calling it 'trickle down' and putting it in quotes, but what brings bread to the table is investments."
Associate economics professor John Horowitz expressed concern that Pence, politically, might be bringing "too much to the table." He was concerned about the opposition.
Pence said he has already heard dissent in the House, though he introduced the bill Wednesday evening. He said he expects opposition, given the tax he's going after.
He also expects support, though, he said. Pence had already accrued 33 cosponsors in the first three hours, and he said potentially about 100 more could enlist as cosponsors.
But that's only in the House. Pence said he expects difficulty in the Senate. In order to maneuver through the chamber, where Republicans maintain a narrower lead, Pence wants to attach his bill as an amendment to President Bush's economic stimulus bill.
According to the Associated Press, Bush's bill would provide tax relief to an estimated 92 million Americans by accelerating income tax rate cuts, boosting the child tax credit by $400 per child and repealing all federal taxes on stock dividends.
Economists present Friday were enthusiastic about repealing stock dividend taxes, though Democrats in Washington have said such a move would only benefit the wealthy.
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