Rep. BIll Owens, D-Plattsburgh, often says that Bill Clinton-era tax levels for the wealthy didn't kill the economy in the 90s, so there's no evidence that going back to those levels would kill the economy in 2013.
But "Clinton-era tax levels" actually refers to a broad range of taxes. Mr. Owens hastens to add that he wouldn't mind seeing the top rate revert a few percentage points upward for the highest earners, above $250,000 or $500,000. He wants taxes to stay the same for people below that level.
But what about the capital gains tax?
First, a bit of history. President Clinton cut the capital gains tax from 28 percent to 20 percent. Some people argue that the move helped spur the economy in the 1990s because it made it more profitable to invest. (A quick note: Capital gains taxes are paid when you sell something that you owned for "personal purposes, pleasure or investment," according to the Internal Revenue Service. Think selling stocks.)
President George Bush cut income taxes across the board for every income level, but he also further cut the capital gains tax from 20 percent to 15 percent.
When Mr. Owens discusses Clinton-era tax levels, he includes the capital gains tax, meaning he'd support letting it rise to 20 percent again.
"Well my general view, as you know, of the Clinton tax rates is that we had a tremendous economic boom during that period," Mr. Owens said in an interview today. "We put 23 million people to work. I don't know that the difference between 15 and 20 percent is at all material in terms of economic impact or decisions people would make to invest. I find that very hard to believe. Am I comfortable with 20 percent? I am."
Matt Doheny, Mr. Owens' Nov. 6 opponent, doesn't want to raise marginal rates on individuals, and also doesn't want to raise that capital gains rate, his campaign said in a statement.
(Another quick note here: Despite Mr. Doheny's extensive financial background, the majority of his income has been taxed as ordinary income at the highest marginal level of 35 percent, he says. [A note within a note: His mom told me he won't buy stocks, considering them a risky investment.] So he's not paying that 15 percent capital gains rate on the money he takes in. He hasn't released his tax returns, but described them to me in an interview.)
"When a Democratic president and a Republican Congress worked in a bipartisan manner to lower the capital gains rate from 28 to 20 percent, they encouraged a lot of creative people to start companies or invest in existing businesses," Mr. Doheny, a Republican, said. "That's part of why we had tremendous growth during the 1990s. Anyone that understands business and economic knows that tax rates are always taken into consideration when deciding whether to invest. So my opponent is wrong when he suggests raising the rate will have no effect on economic growth. Our economy simply cannot withstand the tax increases my opponent continues to advocate for."