December 8, 2005

House votes to extend reduced investment taxes

WASHINGTON (Reuters) - The U.S. House of Representatives on
Thursday approved legislation extending reduced tax rates for
investment income that Republican backers said were needed to
maintain U.S. economic growth.

The House voted 234-197 to extend for two years a 15
percent tax rate for capital gains and dividends. The reduced
investment tax rates were the centerpiece of President George
W. Bush's 2003 tax cut and without congressional action they
will expire at the end of 2008. Rates will go back to 20
percent for capital gains and regular income rates for

The package passed by the House would reduce federal
revenues by about $56 billion over five years and Democrats
complained that the Republican majority was increasing the
deficit and cutting spending for poor children, education and
other social programs in order to give tax cuts to the rich.

The bill is part of a broader effort by the
Republican-controlled Congress to cut spending and extend
Bush's tax cuts. The Senate last month approved its version of
tax cut legislation, omitting provisions for capital gains and
dividends. The two sides will have to work out their
differences before sending legislation to Bush for his