The U.S. House of Representatives is warning that raising long-term capital gains on mutual fund investors any higher than they already are will seriously impair the markets, shareholders and, eventually, retirees.

Citing a recent Lipper report, the U.S. Joint Economic Committee underscored the $16.7 billion in additional capital gains that shareholders paid in tax year 2007, for a total bill of $334.0 billion, up from $233.8 billion in 2006.

"The tax law should be changed to permit mutual fund shareholders to defer most or all taxes on reinvested long-term capital-gain distributions until the mutual fund shares are sold," said Congressman Jim Saxton (R-N.J.), a ranking member of the Committee and author of H.R. 397.

The Lipper report warns, in strident language: "Considering most mutual fund investors reinvest their distributions back into the funds, that is a large price to pay for a buy-and-hold strategy!!!"

Saxton added: "As the new study shows, the tax burden on mutual fund shareholders is rising as mutual funds continue to realize net capital gains. This tax burden is a drag on saving and reinvestment and will get much worse if tax rates on capital gains are allowed to increase in coming years."

Economists to New York: Recession Would Hit Hard And Linger Years Longer

Economists are warning New Yorkers a U.S. recession would last longer and be bleaker in the Big Apple due to its heavy dependence on Wall Street. Unlike other recessions, the nature of the subprime crisis appears to be widespread and pervasive.

(c) 2008 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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