STOP DIVIDEND TAX INCREASE AND STOCK PRICE EROSION

Current tax rates on dividend income, which now are capped at
15 percent, are set to expire on December 31. For the millions
of Americans who own stocks that pay dividends, their tax rates
on this income would surge—almost tripling in some cases. Now
is not the time to reduce dividend income through higher taxes
and penalize Americans who invest in our nation’s future. Your
voice matters—click on the Defend My Dividend link above to
tell Congress to stop a dividend tax hike! A vote on these
issues could come as soon as the end of July.

If Congress and the President fail to stop a dividend tax hike,
investors will face a maximum 23.8-percent tax rate on capital
gains versus a maximum 43.4-percent rate on dividend
income. This will create a tax policy that distorts investment
decisions by favoring growth stocks and debt investments
over dividend-paying investments. That’s because investors
likely would retreat from stocks that pay dividends in favor of
other investments with a lower tax burden.

Such a trend invariably would erode the share prices
of many dividend-paying companies, whose stocks are
held by working families, retirees, and others who rely on
those investments for steady dividend income. That’s why
maintaining parity between the tax rates for dividends and
capital gains is essential.

Join Us In Asking Congress To Stop A Dividend Tax Hike.

Eleventh-Hour Compromise Preserves Lower Dividend Tax Rates for Two More Years

On December 7th, 2010, Republican negotiators and President Barak Obama finally agreed on an extension of the Bush tax cuts that held the tax rate on dividends at fifteen percent. Without the agreement, rates would have risen as high as 39.6 percent.  Pressure brought by Wisconsin Utility Investors and thousands of other investors and taxpayers around the country led to the President’s ultimate capitulation on the issue.

As a part of the agreement, unemployment benefits will remain in effect through the end of 2011 for workers who have been laid off for more than 26 weeks and less than 99 weeks.  A Social Security tax cut will apply to workers, not employers, and will drop rates from 6.2 percent of pay to 4.2 percent for one year. In addition, the agreement will extend a variety of other tax breaks for lower and middle-income families, including the Earned Income Tax Credit and the Child Tax Credit. The Estate Tax Provision will mean the first $5 million will pass tax-free to heirs.   Anything over that will be taxed at a rate of 35 percent.

Once again, citizen action has proven it is possible to have a positive influence on public policy.  However, it must not be forgotten that the issue will arise again in less than two years.

Stop the Dividend Tax Increase

President Obama and Republican leaders in Congress have reached an agreement that would continue to tax dividends at a maximum rate of 15%.

If Congress fails to act on this agreement before the end of the year, your dividend tax rate would rise as high as 39.6%, a 164% tax increase.

Contact your representatives in Congress today and ask them to stop the Dividend Tax Increase before it hurts smal investors like us.

Just click here or on the PowerLines logo to the right to send your own message to your own US Senators and Congressional Representative.

UNINTENDED CONSEQUENCES of the Dividend Tax Hike

If Congress fails to act, the
top tax rate on dividends
will soar 164-percent on
January 1, 2011.

Since 2003, the top federal income tax rate on dividends
has been fifteen percent. The new tax rate will rise to as
high as 39.4-percent. While the implications for individual
investors are clear, a dividend tax rate hike could
lead to additional unintended consequences. Simply
stated, lower dividend tax rates are good for investors,
consumers, American businesses, and the recovering
U.S. economy. In addition to the more than 27 million
Americans from all income levels and age groups who
directly own stocks that pay dividends, tens of millions
more also own stocks indirectly through mutual funds, life
insurance policies, IRAs, pension funds, or 401(k) plans.
Additionally, lower dividend tax rates benefit Americans
who don’t own stock or mutual funds by helping to
spur the growth that is needed to create new jobs and
strengthen the economy.

Raising taxes on dividends, as well as on capital gains,
would discourage saving and investing at exactly the
wrong time. A tax penalty would hamper investment in
U.S. corporations, depriving businesses of the necessary
capital to grow, and consequently stifle our nation’s
economic recovery. Coming out of one of the worst
economic periods in recent memory, lower dividend
tax rates have helped to attract and keep shareholders
who are interested in a long-term buy and hold strategy
benefiting individual shareholders, companies, and
ultimately, the economy. As the nation continues to slowly
recover, now is not the time to discourage Americans
from investing in dividend-paying companies by raising
their taxes. Instead, Congress must encourage long-term
investment in our nation’s economy and future.

WUI members and all other stockholders
must act to protect our fragile economy by
telling Congress to stop the dividend tax
increase.

Defend my Dividend

PENDING DIVIDEND TAX INCREASE MOST CRITICAL ISSUE FOR WUI MEMBERS

Despite less than desirable weather, a record crowd turned out for the 2010 Wisconsin Utility Investors Annual Meeting in Oshkosh September 23rd to hear speakers discuss a variety of utility topics. Most important, however, was the necessity of defeating the pending increase in the tax on dividends. WUI Executive Director Bob Seitz described the ways members can affect the outcome on this important issue. J.P. Toner of the Edison Electric Institute outlined the basic arguments:

• Raising dividend tax rates would create a tax policy that favors capital gains over dividends. Maintaining parity
between tax rates for dividends and capital gains is essential so tax policy doesn’t favor growth stocks and debt
investment over dividend-paying investments.

• Raising dividend tax rates would disadvantage the largest dividend-paying sectors, including electric and natural gas utilities, making it more difficult to finance critical infrastructure projects that are sources of high-quality job creation.

• Raising taxes on dividend income – even if only for higher-income taxpayers – would affect all taxpayers who receive dividends by discouraging investment in dividend-paying companies and potentially lowering dividend payments for everyone.

Members can contact their legislators either by clicking on the POWERLINES link or the DefendmyDividend link on this page.

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