“We’re going to make sure that we keep at 20 percent the existing rates on dividends and capital gains,” Geithner told the show. “We think that’s good policy.”
Camp’s letter points out that the statement contradicts current law and has also caused some confusion on Capitol Hill and in the marketplace.
“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 congressman said in prepared remarks.
Camp’s letter asks if the Geithner will insist that Congress limit the tax increase on dividends to 20 percent and if the change will require offsets.
The lower rate would bring less than the expected revenue into the government. Pay-as-you-go rules stipulate that this cost differential would have to be paid for.
Camp also asked Geithner if the 20 percent rate will include the new healthcare law’s 3.8 percent tax on investments that will apply to wealthier taxpayers beginning in 2013.
“In light of this 3.8 percent tax on investment income, will you urge Congress either to limit the ‘regular’ capital gains and dividend rate to 16.2 percent, or to repeal the 3.8 percent tax, so that the total rate on capital gains and dividends does not exceed 20 percent,” the letter asks.
Congressional tax writers have started looking at how to structure the tax increase on investments.
Senate Finance Chairman Max Baucus (D-Mont.) earlier this week echoed a similar sentiment as Geithner on the dividend issue.
“We can’t let dividends go to ordinary rates,” he told reporters.