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Defend my dividend countdown update
As we move closer to a new year, America’s investors are also moving closer to an equally significant milestone. When we ring in 2010, only three short months from now, we also start a countdown that may very well lead to no celebration at all.
If Congress does not act, on December 31, 2010, investors from all walks of life – whether individual retirees or pension fund managers – will face markedly increased taxes on their dividend income. In fact, the maximum dividend tax rate will jump from the current 15 percent to almost 40 percent!
I was just in Albuquerque, New Mexico, speaking to more than two hundred investors who are concerned about what the future holds for them. This event, an annual luncheon for members of the New Mexico Utility Shareholders Alliance, brought home to me the importance of face-to-face advocacy. I had been invited to talk about this very issue and to let everyone in the room know that someone was looking out for them.
Discussing the Defend my Dividend campaign
Lauren Blosse and I joined more than 30 representatives of the American Gas Association (AGA) and the Edison Electric Institute member companies and state utility shareholder organizations at a meeting to re-launch the Defend My Dividend (DMD) campaign. The July 15 event was held in Chicago and provided an important forum for key industry advocates to coordinate the DMD message of fair and reasonable tax rates on dividend income.
In light of the President Obama’s budget and Senate Finance Committee Chairman Max Baucus’ supporting legislation, the campaign recently retooled its Web site (www.DefendMyDividend.com) and refined its messaging to commend the president and chairman who have both made statements in support of maintaining and making permanent the 15 percent dividend tax rate for a vast majority of Americans and capping the rate at 20 percent for other taxpayers.
In this video clip, I have a chance to discuss the DMD campaign and other key issues with Mandy Clark, Executive Director of Utility Shareholders of Florida.
Defend your dividend
In 2003, Congress passed an important law – the Jobs and Growth Tax Reconciliation Act of 2003 – that temporarily reduced the maximum tax rate on dividend income to 15 percent. Extended in 2006, the reduced tax rate is now scheduled to expire on December 31, 2010. One of the original goals of the 2003 law was to jump-start the economy and generate investment in the stock of American companies.
Realizing the important role the dividend tax rate reduction played in creating economic growth, the 2006 extension pushed the expiration date from 2008 to 2010. Now, in an increasingly uncertain economy, Congress will soon debate whether to let the dividend tax rate reduction expire. If it does, we could see the tax rate on dividend income jump overnight to an astonishing 39.6 percent.
Recently the Defend My Dividend coalition, a national grassroots advocacy campaign that supports making low tax rates permanent, commended proposals by President Obama and Senate Finance Committee Chairman Max Baucus (D-MT) to make permanent the current capital gains and dividend tax rates for the majority of Americans while capping the rate at 20 percent for higher-income families. Chairman Baucus recently introduced legislation that mirrors the capital gains and dividend policies in President Obama’s FY2010 budget.
This issue is important because the lower dividend tax rate helps attract much-needed capital for the energy sector at a time when utilities are making major investments in power generation and delivery facilities. Since our economy relies on affordable, reliable energy, we need to help ensure investment in our energy infrastructure by capping the maximum tax rate on dividends.
If you are one of the more than 50 percent of households who own stock in electric and gas utilities, we urge you to visit the campaign web site, www.DefendMyDividend.org, and become a part of the effort to extend or make permanent today’s reasonable tax rate on dividends.
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