|Taxation of Long-term Capital Gains and Qualified Dividends|
Research shows that family business owners have a longer-term planning horizon; they also reinvest a large percentage of their earnings into the business which in turn provides a stable base for company growth. Increasing the taxes on long-term capital gains and dividends ultimately has a negative impact on a business-owning family’s reinvestment in the company and overall economic activity.
Current law allows both qualified dividend income and long-term capital gains income to be taxed at the same rate – 15%. However, there is a push to return the dividend tax to its previous levy (the top individual marginal rate of the dividend-receiving shareholder). Any increase in the dividend rate may deter growth incentives for family-owned companies since returns are paid through dividends. With current law rates expiring at the beginning of 2013, FEUSA plans to educate policy makers about the benefits of extending (short-term or permanent) the 15% rate.