Washington, DC – Ways and Means Ranking Member Dave Camp (R-MI) today sent Treasury Secretary Timothy Geithner a letter requesting clarification and elaboration on his recent statement that tax rates on dividends and capital gains would not exceed 20 percent. In contrast to Secretary Geithner’s statement, congressional Democrats’ pay-as-you-go law calls for the top statutory tax rate on dividends to skyrocket in 2011 from 15 percent to 39.6 percent. When taxpayers factor in the return of provisions that phase out personal exemptions and limit deductions, the effective rate jumps to 41.6 percent next year and over 45 percent in 2013 due to tax increases in the Democrat’s recently enacted health care law.
Among Rep. Camp’s questions:
- Will Secretary Geithner insist that Congress limit the top statutory rates on capital gains and dividends to 20 percent, even if that means not offsetting the foregone revenue with other tax increases or spending cuts?
- If not, which tax increases or spending cuts does he recommend be used to prevent these tax increases?
- Does the proposed 20-percent rate account for the new 3.8-percent tax on investment income included in the recently-enacted Health Care and Education Reconciliation Act of 2010?
“We need to be encouraging investment, but the pay-as-you-go rules, coupled with the health care law, will triple the taxes on dividends,” said Camp. “That will have a chilling impact on our economy and hurt millions of seniors who rely on dividends for retirement income. If Secretary Geithner is serious about avoiding this massive tax increase, then I encourage him to share his plans with Congress and the American people.”
The full letter can be read here.