47 House Democrats break ranks with Obama on taxes

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 Barack 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 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 yesterday. "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.

The letter also raises fresh doubts about how Congress will address the expiring tax cuts when lawmakers return to Washington for a lame duck session after the election.