Bush hints at new tax cut

Associated Press

WASHINGTON — President Bush opened the door Tuesday to a future cut in the capital gains tax, a longtime Republican prescription for reviving an ailing economy, but said he first wants to see the effects of last spring’s income tax cut.

Bracing for an autumn of wrestling with Democrats over the sluggish economy and diminished budget surplus, Bush told reporters that before reducing the capital gains tax, he wanted to give the income tax cut time to stimulate the economy. "But I’m open-minded," Bush said before meeting with Senate leaders as Congress returned from its summer break.

White House spokesman Ari Fleischer said the idea could be considered for the fiscal 2003 budget, to be sent to Congress early next year. Congressional Republicans had wanted the capital gains cut as soon as possible.

Bush said trimming the capital gains tax rate — now 20 percent for most people — "would pile up some revenues" for the government. That would be a huge help for the administration as it scours the tight budget for money to pay for its proposals to boost defense, education and other spending.

Many economists say the government could make money in the early period of a capital gains tax cut — as additional people sell their property to take advantage of the lower taxes — but the reduction would be a money-loser for the government in the long run.

Republicans say it is a moneymaker because it prompts property sales that would not have occurred otherwise.