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WASHINGTON -- Today, a coalition of 22 organizations representing taxpayers, shareholders, small businesses, and senior citizens sent a letter to House Majority Whip Roy Blunt urging the House of Representatives to immediately bring up a vote on extending the capital gains and dividend tax cuts signed into law in May 2003. Subsequently, the letter urges the House to move quickly to conference the House version with the Senate bill before the end of the year.
The tax cut was included as part of President Bush's 2003 Jobs and Growth Tax Relief Reconciliation Act (JGTRRA), which reduced the long term capital gains tax rate from 20 to 15 percent and the double tax placed on dividend income from 38.6 to 15 percent.
"Failure to extend these very successful tax cuts before the end of the year will eventually slow down the booming U.S. economy," said Daniel Clifton, executive director of the American Shareholders Association. "If the tax rates are not extended investment will slow, stock market gains will be muted, and eventually job creation will decline."
Some members of Congress believe that since the tax rates do not expire until December 31, 2008 there is still time to extend these rates and thus no urgent need to do it this year. Yet, failure to extend the dividend and capital gains tax rates will slow the economy, reduce job creation, and reverse two-and-a-half years of stock market gains. In the two and one half years since the rate reduction, $4 trillion in new shareholder wealth was created and the total net worth for American households has increased by $10.5 trillion. At the same time investment is soaring and 4.46 million jobs have been created.
"This was a great week for economic news with reports of strong economic growth, job creation, and factory output," continued Clifton. "This is in large part due to the pro-growth tax cut policies which were enacted in 2003. We need to keep this economic momentum going. No other act of Congress will have such a large impact on the U.S. economy if they fail to extend the lower tax rates. And this economic slowdown will begin right before the 2006 midterm elections. So inaction will occur at their own peril."