The lower rates on capital gains and dividend taxes are set to expire at the end of 2008. Making permanent these important tax changes will keep the maximum tax rate on both dividends and long-term capital gains at 15 percent. If Congress fails to act, the maximum rate for dividends will rise to 35 percent and the top long-term capital gains tax rate will return to 20 percent.
“These tax changes have already yielded tremendous economic results,” said Richard Hunt, SIA senior vice president for federal policy. “Investors, businesses, and the U.S. economy have just started to reap the benefits from the reduced rates, but those benefits may be temporary if the rates are allowed to expire.”
“Uncertainty about whether or not taxes on capital gains and dividends are going to increase after 2008 makes it extremely difficult for investors and businesses to do any sort of financial planning beyond the immediate near term,” said Hunt. “Congress needs to act now.”