WASHINGTON _ Capital gains tax legislation has been introducedby Sens. Orrin Hatch (R-Utah) and Joseph Lieberman (D-Conn.) thatwould encourage investment in small corporations such as biotechfirms.
Hatch and Lieberman told a Thursday press conference that their billwould forestall a 1996 recession predicted by some economists.
The bill carries a price tag of $60 billion over seven years, accordingto Hatch. The seven-year figure coincides with Republican efforts tobalance the budget by 2002.
The bill provides two tiers of incentives to investors. The first rollsback the capital gain tax rate to 50 percent on net capital investment,lowering the top individual tax rate to 19.8 percent. The currentindividual maximum rate is 28 percent. The maximum corporate ratewould be rolled back from 35 percent to 25 percent.
The venture capital incentive in the Hatch-Lieberman bill givesinvestors in small firms a 75 percent break on capital gain taxes ifthey hold the investment for at least five years. It applies to newinvestments made after Jan. 1, 1995 in corporations with assets of$100 million or less.
The Biotechnology Industry Organization (BIO) hailed the bill as"tailor made to attract private sector funding for biotechnologyresearch," said Chuck Ludlum, BIO vice president for governmentrelations.
"We have always preferred a two-tiered incentive such as the onecontained in the Hatch-Lieberman bill even though we do support thesingle-tiered House-passed capital gains tax plan," said Ludlum.
House and Senate Republican leaders are near an accord on the sizeof this year's tax cut, including a capital gains rollback. Ludlum saidhe is more optimistic than he was two weeks ago that the fiscal 1996budget resolution that governs all federal spending and receiptswould accommodate a capital gains tax cut.
The Senate has made major concession to the House which hadsought much larger tax breaks for families as well as business. Thefinal size of the tax cut will be worked out in a House-Senateconference on the budget resolution.
Ludlum told BioWorld Today that he expects the venture capital taxincentives will attract support from House members. "There is nodoubt that there will be a capital gains tax, the only question is whatkind." Ludlum said he expected that a two-tiered proposal similar tothe Hatch-Lieberman bill will be introduced in the House next week.
OTA Lives . . . After Dispute Over Floor Votes
The House Republican leadership averted a protracted partisandispute on Thursday when it allowed a rare re-vote on an amendmentto restore funding to the Office of Technology Assessment. BothHouse and Senate GOP leaders had called for eliminating the agencyand letting other government agencies assume its functions.
While the amendment lost by one vote on Wednesday (See BioWorldToday, June 22, 1995, p. 1), it was approved handily on Thursdaymorning by a vote of 220-204.
Democrats charged that the Republicans had prevented two of theirmembers from voting while trying to enforce a 17-minute time limiton roll call votes.
OTA spokeswoman Jean McDonald told BioWorld Today that "themood is a lot different around here today" and said the re-vote putsthe agency on much more solid footing as the House-passed bill goesto conference with the Senate on fiscal 1996 legislativeappropriations for Congress, which includes OTA's budget. n
-- Michele L. Robinson Washington Editor
(c) 1997 American Health Consultants. All rights reserved.