The five-year gains rate for most other taxpayers will drop to 18 percent from 20 percent, but not until 2006.

Republican negotiators have been pushing for a 15 percent capital gains rate.

Congress wanted to cap the long-term gains rate at 28 percent during the phase-in of the new tax bracket system.

But perhaps the most pressing reason behind the push for a higher capital gains rate is the perception of fairness.

House Republicans would accept a higher top rate in return for a lower capital gains rate.

That's a shortsighted solution to a long-term problem, because cutting the gains rate would cause sizable losses of revenues after the first year or two.

Had that not happened, a taxpayer subject to the alternative tax would not have received any benefit from the cut in gains rates.

Let's be honest: it is a charade that private equity firms have claimed their 20 percent performance fees at the lower capital gains rate.

The old gains rate of 20 percent would have taken only $25,000 for a net of $100,000 on that land sale.

For instance, she notes, the super-rich can take their salary in the form of stock options, which are taxed at a lower capital gains rate.