H.R.2089 - Generating Retirement Ownership through Long-Term Holding (119th Congress)
Summary
H.R. 2089, the "Generating Retirement Ownership through Long-Term Holding" act, proposes an amendment to the Internal Revenue Code of 1986. The amendment allows individuals to defer recognition of capital gains distributions from regulated investment companies (RICs) if those distributions are automatically reinvested in additional shares of the company. This deferral would apply until the shares are sold, redeemed, or upon the death of the individual.
Expected Effects
The bill aims to incentivize long-term investment, particularly for retirement savings, by postponing the tax liability on reinvested capital gains. This could encourage individuals to save more for retirement through regulated investment companies. The change primarily affects individual investors and not estates or trusts, and it includes specific rules for recognizing deferred gains upon sale, redemption, or death.
Potential Benefits
- Encourages long-term investment by deferring taxes on reinvested capital gains.
- Simplifies tax reporting for individuals who automatically reinvest dividends.
- Potentially increases retirement savings by allowing individuals to accumulate more capital before paying taxes.
- Could lead to increased investment in regulated investment companies, benefiting the financial sector.
- May provide a modest boost to market stability by promoting longer holding periods.
Most Benefited Areas:
Potential Disadvantages
- Primarily benefits individuals with capital gains distributions from regulated investment companies, potentially creating a disparity.
- Could complicate tax calculations upon sale, redemption, or death, requiring careful tracking of deferred gains.
- The exclusion of estates and trusts may limit the overall impact of the bill.
- Potential for revenue loss to the government due to deferred tax collection.
- May disproportionately benefit higher-income individuals who are more likely to invest in regulated investment companies.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The bill amends the Internal Revenue Code, which is the primary mechanism for federal taxation. There are no apparent conflicts with individual rights or freedoms guaranteed by the Constitution or its amendments.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).