Money Talk: Capital Gains Tax Battle Coming To House

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CAPITAL GAINS TAX BATTLE COMING TO HOUSE
Last week, Gov. Asa Hutchinson’s signature middle class tax cut unanimously passed the Senate Revenue and Taxation Committee Wednesday with an amendment to do away with a capital gains tax cut passed two years ago.

Legislators in 2013 had voted to increase the exemption from 30% to 50% and exempt all capital gains above $10 million. The rate will revert back to the 30% rate under the amendment, which was introduced by Sen. Bill Sample, R-Hot Springs.

The bill’s sponsor, Senate President Pro Tempore Jonathan Dismang, R-Searcy, said after the meeting that Hutchinson “was part of the conversation” regarding the repeal, which he said accomplishes the goal of broad-based tax reform. Combining the repeal with the tax cut expedites the process, he said. The full Senate also passed the tax cut plan and sent it to the House.

As early as Tuesday, the House Revenue and Tax Committee will take up the Governor’s tax cut plan, but some House members are balking at the capital gains tax reversal. Because the bill could be viewed as a tax hike by some – despite the middle class tax cuts – members are seeking a solution.

What may happen is a compromise where the House ups the Senate’s version from the 30% rate to 40%, still 10% below the 2013 change.

QE-EUROPE?
After six years of U.S. Fed policy called quantitative easing (QE), it appears the European Central Bank may give it a try. The program of massive government purchases of bonds has been a debatable topic as part of the nation’s slow economic recovery. American federal regulators have made about $4 trillion in bond purchases to stimulate the economy. Vanguard reports:

European Central Bank President Mario Draghi said Thursday that the central bank plans to purchase more than $1 trillion in private and government bonds by the fall of 2016 to help stimulate the Eurozone economy. The program — the central bank’s most aggressive step yet — is designed to combat ultra-low inflation and economic stagnation that have plagued the region since the global financial crisis.

By increasing the money supply and keeping interest rates low, the central bank hopes to encourage borrowing and, ultimately, spending. The program is expected to begin in March and run through September 2016, at which point the ECB will reevaluate economic conditions, said Mr. Draghi.

EARNINGS SPIKE FOR SIMMONS FIRST NATIONAL
Simmons First National Corp. reported $11.4 million in earnings for the fourth quarter of 2014. The Pine Bluff-based financial institution recorded $35.7 million in net income for the full year. Simmons First has acquired four banks in the last two years. It has completed integration with two of those banks, while the other two mergers are still awaiting full regulatory approval. Read more highlights here and for a deep-dive into the bank’s earnings call with analysts, read here.

WINDSTREAM RECEIVES REGULATORY APPROVALS FOR REIT, NAMES COMPANY
Little Rock-based Windstream said it has received all regulatory approvals from state public service commissions required for its planned real estate investment trust (REIT) spinoff, which will be named Communications Sales & Leasing, Inc. (CS&L). Windstream earlier received a favorable private letter ruling from the IRS relating to the transaction. The transaction for the REIT is expected to close in the first half of 2015.

While the soon-to-be new public company now has a name, it doesn’t have a ticker symbol yet. Company officials are still working through that aspect of the transaction.