Even as our nation begins to slowly recover from one of the worst economic periods since the Great Depression, Congress may yet go after investors by raising taxes on dividend income.  The White House, through the statements of Treasury Secretary Tim Geithner, appears to have solidified its support for fair and reasonable dividend tax rates.

President Obama’s proposed budget for fiscal year 2011 maintains the 15-percent tax rate on dividends for most middle-income taxpayers and a zero-percent rate for low-income taxpayers. For married taxpayers earning more than $250,000 ($200,000 for single taxpayers), the tax rate on dividends is increased to a reasonable 20 percent.  That is both fair and supports the investment goals of hard working Americans in all tax brackets.

Defend My Dividend, the grassroots campaign dedicated to preserving lower dividend tax rates, supports this proposal. For older investors who rely on dividends that might mean more active income – money to pay for food and medicine – and for those still working it may mean more money to put toward their future and that of their children.

By attracting new investment, companies like utilities are able to raise the capital needed to expand their delivery infrastructure to serve more customers, while also investing in new, cleaner generating capacity and environmental and energy efficiency improvements.

In recent months however, the White House has sent mixed messages regarding its stance on dividend tax rates, not wholly unexpected as public debate and political posturing on taxes has increased as well.  Treasury Secretary Geithner said on several occasions that current lower tax rates should be extended for the middle class and allowed to expire for the top two percent of earners.

The question remained: does such a plan affect all taxes that were reduced as part of the 2003 package, including dividend tax rates?  Was the administration going to stick to its own budget proposal?

Almost immediately, Defend My Dividend and other key coalitions began to dig into his statements, looking for some clear messaging about dividend tax rates.

Last week we got an answer from Geithner himself.  Making the rounds of the Sunday political talk shows and sitting for a Reuters’ interview, he clearly stated that the tax rate for dividends and capital gains should not be allowed to rise above 20 percent.  “We think it makes sense to make sure that 98 percent of Americans and 97 percent of small businesses see continuity in their taxes and we want to keep capital gains and dividends from rising above 20 percent.”

This is a very important development that clarifies the administration’s support for lower dividend tax rates – one that we support and applaud.

Now Congress needs to act on the president’s responsible support for keeping dividend tax rates from rising above 20 percent.  It’s the right thing to do for America’s investors and for the economy.

To learn more about Defend My Dividend, visit our website where you can read the facts about dividend tax rates, take action to show your support and quickly and easily send a letter right to your representatives and senators.

You can also contact us at: info@DefendMyDividend.org.