The American Gas Association (AGA) and the Edison Electric Institute (EEI) have joined forces to launch a new campaign to permanently set the personal tax rate on qualified dividend income at 15 percent. 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 relatively low tax rate on dividends.
In 2003, Congress temporarily reduced the maximum tax rate on dividend income from 38.6 percent to 15 percent. As a result, this lower tax rate has meant that utility shareholders can keep more of their dividend income. It has also spurred investment in dividend-paying companies such as utilities, that rely on the new capital to build pipelines, transmission wires, power plants, and make investments in new energy efficiency and environmental technologies-all to keep pace with the country’s continually rising demand for energy.
Unfortunately, the current 15 percent maximum tax rate on dividend income is set to expire at the end of 2010-unless Congress takes action now to extend or make it permanent. Without any action, the new maximum tax rate on qualified dividends could increase to more than 39 percent for some taxpayers.
The dividend issue is particularly important today, given the slowing economy and credit crisis. Senior citizens make up the largest number of utility shareholders-64 percent of utility shareholders are 65 years or older. Middle- and low-income households also are affected by the dividend tax rate issue. Sixty-eight percent of those receiving utility dividends have annual incomes of $75,000 or less, and 42 percent of utility shareholders earn less than $25,000 per year. These shareholders rely on their quarterly dividend checks to help with everyday expenses. They would be particularly harmed if the higher tax rate on dividends went into effect.
This past November, nearly 60 utilities met to discuss, plan and launch “Defend My Dividend” (DMD), a joint campaign of AGA and EEI to convince Congress to make permanent the 15 percent tax rate on dividend income. The DMD campaign is amplifying and focusing the full grassroots power of the country’s natural gas and electric utility industries. Working together, the DMD campaign is now telling Congress that millions of average Americans across the country depend on dividend income to heat their homes or pay for medicine, food and other essentials, and they do not want to pay higher taxes on these crucial earnings.
The campaign’s web site, www.DefendMyDividend.org, offers more information about the campaign, as well as updates, and importantly, a way for you to join the effort to renew the lower tax rate on dividends. Please visit the site today, and tell other utility shareholders, along with your friends and family, about the site too. We need everyone’s voice to make a difference in keeping today’s 15 percent tax rate on dividends permanent.