A House Democrat is petitioning House Speaker Nancy Pelosi to extend even more tax cuts to wealthy people.
Rep. John Adler (D-NJ) is seeking signatures to a letter to Democratic leadership asking them to extend dividends and capital gains tax rates — the other Bush tax cuts, passed in 2003 and set to expire at the end of the year.
The text of the draft, obtained by TPM, argues that freezing dividend and capital gains tax rates will benefit seniors, middle class households, and businesses.
“[W]e strongly believe that Congress should extend the current tax rates for dividend and long-term capital gains taxes,” Adler writes.
“By keeping dividends and capital gains tax rates linked and low for everyone, we can help the private sector create jobs and allow seniors and middle class households to save and invest more. A dividends tax increase would impede our nation’s economic recovery by decreasing the amount of capital that companies would have access to, thereby slowing the private sector’s ability to grow and create jobs.”
If they expire, as President Obama has suggested, long-term capital gains tax rates will rise to 20 percent from their current 15 percent level. Dividends would be taxed as ordinary income.
You can read the entire letter below. A request for comment from Adler’s office was not returned.
Dear Speaker Pelosi:
A number of tax cuts enacted in the past decade are due to expire at the end of this year. Our fiscal policy should be one that maximizes economic growth and private sector job creation. That is why we strongly believe that Congress should extend the current tax rates for dividend and long-term capital gains taxes.
By keeping dividends and capital gains tax rates linked and low for everyone, we can help the private sector create jobs and allow seniors and middle class households to save and invest more. A dividends tax increase would impede our nation’s economic recovery by decreasing the amount of capital that companies would have access to, thereby slowing the private sector’s ability to grow and create jobs.
We also have a responsibility to protect middle class families and seniors from harmful tax increases and their economic impact. Raising the tax rate on dividends would likely cause some companies to forego paying dividends and others to pay a lower amount to shareholders. These outcomes would disproportionately affect seniors and those saving for retirement as they represent a large portion of investors who own dividends paying stocks. Many seniors depend on this income to supplement their fixed retirement income. A recent study found that in 2007 over 27 million tax returns had dividends qualifying for the tax rate reduction. Of those returns, 61 percent were from taxpayers age 50 and older and 30 percent were from taxpayers age 65 and older.
Our economy is fragile. We need tax policies that will promote our recovery. Raising taxes on capital gains and dividends could discourage individuals and businesses from saving and investing. We urge you to maintain the current tax rate for both dividend and long-term capital gains taxes.
Sincerely,
