47 Dems call for freeze on investment 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,” the letter states. 

Under current law, beginning next year capital gains will be taxed at 20 percent while dividends will be taxed at ordinary income rates that go as high as 39.6 percent.

The White House has called for placing a 20 percent tax on capital gains and dividends next year. However, pay-as-you-go rules stipulate that the cost for changing the dividend tax must have to be paid for — unless Congress waives the rule. 

The letter does not address how this cost should be paid for, but does suggest that unintended consequences would befall the investment community if the tax on investments increased.

“Raising the tax rate on dividends would likely cause some companies to forego paying dividends and others to pay a lower amount to shareholders,” it states. “These outcomes would disproportionately affect seniors and those saving for retirement as they represent a large portion of investors who own dividends paying stocks.”

The letter adds: “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 dividends and long-term capital gains taxes.”