WASHINGTON - Forty-seven House Democrats - enough to give Republicans a victory on taxes if the issue came to a vote - are breaking ranks with President Obama by calling on party leaders to continue Bush-era tax cuts on investment income.
The lawmakers, led by Rep. John Adler, D-N.J., have sent a letter to House Speaker Nancy Pelosi saying they strongly support extending the current tax rates on capital gains and dividends.
"Raising taxes on capital gains and dividends could discourage individuals and businesses from saving and investing," said the letter, dated Friday and released Tuesday. "We urge you to maintain the current tax rate for both dividend and long-term capital gains taxes."
Tax cuts enacted in 2003 set the top tax rate on capital gains and dividends at 15 percent. Those tax cuts expire at the end of the year, and Obama wants to let the top tax rate on capital gains and dividends increase to 20 percent for individuals making more than $200,000 and married couples making more than $250,000.
The letter shows that many Democrats, some of them vulnerable in the upcoming elections, are unwilling to follow Obama on taxes.
But if all 47 Democrats who signed the letter side with Republicans, they could prevail in extending the investment tax rates for all taxpayers, including the wealthy. The letter was signed by several vulnerable freshmen and members of the conservative Blue Dog coalition.
The letter highlights divisions among Democrats over their party's message on taxes just five weeks before congressional elections in which Democrats will be fighting to maintain majorities in both the House and Senate. Some Democrats have decided it is better politically to distance themselves from Obama and Pelosi as they campaign to keep their jobs.
Obama and Democratic leaders in Congress want to extend the tax cuts for individuals making less $200,000 and married couples making less than $250,000. Republicans and a growing number of rank-and-file Democrats want to extend them all - even for the wealthy - at least temporarily.
Southern Arizona Rep. Gabrielle Giffords was not among the 47 Democrats who signed the letter to House Speaker Nancy Pelosi, even though she is part of the Blue Dog Coalition that was prominent among the dissidents.
Giffords campaign spokeswoman Anne Hilby said Giffords "is committed to extending tax cuts for the middle class, but she will not support more tax cuts for the richest Americans -that will just balloon the deficit, which needs to be brought under control."
Arizona Daily Star