By Kim Dixon
WASHINGTON, May 18 (Reuters) – Companies and investors can only guess whether dividend taxes for high-income Americans will skyrocket next year, a distinct possibility.
If the U.S. Congress fails to take action, taxes on dividends will more than double to about 40 percent next year for individuals earning more than $200,000 and couples with annual incomes of more than $250,000.
The Obama administration favors preventing the tax rate from skyrocketing, but the need for revenue may make that position irrelevant.
The key sticking point is that unlike most of the Bush-era tax cuts expiring at year-end, Congress must dig up tens of billions of dollars in new funds to prevent the dividend levy from spiking.
Last month the Senate passed its budget “resolution,” which sets parameters on spending in different categories and special rules on votes required to pass certain items. For example, it was a budget resolution provision that allowed Senate Democrats to pass the healthcare overhaul with a simple majority vote in March.