Middle Class Investor Relief Act

Madam Speaker, a year ago, the subprime crisis surfaced. This month, we see the results of inordinate and mis-regulated financial risk-taking. The regulator for Fannie Mae and Freddie Mac put these mortgage giants into conservatorship. The Treasury and Federal Reserve intervened to keep the largest U.S. insurer out of bankruptcy. Twice in 1 week, the U.S. stock market posted 1-day drops not seen since two airplanes were flown into the Wall Street's World Trade Center buildings. Congress is taking swift action to protect the capital markets that keep our economy going. We must not forget the small investor.

Middle class families are seeing significant losses in their investments weaken investor confidence, consumer spending and the future growth of our Nation's economy. Stock investors have watched the values of their portfolios drop more than 20 percent this year, and homeowners fear that continuing mortgage market volatility will hamper recovery of the real estate markets--down 30 percent in some regions of the United States. Some middle class Americans nearing retirement may need to work additional years to earn back their stock losses.

With continuing economic uncertainty, we must bring relief to middle class families while boosting investor confidence in an uncertain stock market. Today, I am introducing the Middle Class Investor Relief Act, increasing the maximum annual capital loss a taxpayer can take from $3,000 to $20,000.

Current tax law is asymmetrical with regard to taxing capital gains and writing off capital losses. Long-term gains are taxed at 15 percent while capital loss write-offs are capped at $3,000 per year. An individual who lost more than $3,000 in the stock market could take years to rebuild his or her holdings. The Middle Class Investor Relief Act will correct the asymmetry of current tax law and help middle class Americans recover losses and rebuild their portfolios.