As summer transitions to fall and the days grow shorter, so does the time Congress has to act on extending favorable tax treatment on corporate dividends.
In 2003, Congress temporarily reduced the maximum tax rate on dividend income from almost 40 percent to 15 percent. But unless Congress acts soon, that lower tax rate will expire at the end of this year — causing rates to soar by as much as 164 percent for some taxpayers.
Low dividend tax rates make companies like Duke Energy, which has paid a dividend to investors for 84 years, more attractive to investors. We put this money to work on behalf of our customers and the local economies we serve in the Carolinas and Midwest.
Duke Energy's capital investment program is approximately $15 billion over the next three years. Access to low-cost capital allows us to keep our customers' rates low as we modernize our power plant fleets, and transmission and distribution grid. These investments are improving the environment and creating jobs.
At Duke Energy, approximately 6,000 people are now working on designing and building cleaner and more efficient coal, natural gas and renewable power plants and delivering smart grid solutions. That's quite an economic stimulus. When their work is done, more permanent, well-paying jobs will be created, municipal and county tax collections will increase, and many old, inefficient and high-emitting power plants will be shut down.
In a world of disappearing pensions and longer life expectancies, reliable dividends provide a vital source of income for retirees. An investor motivated by the dividend is also a more loyal and long-term investor — as long as the company performs.
At Duke Energy, our outstanding shares of common stock are currently held equally by institutional investors and retail investors. Our stockholders consistently tell us our dividend is a key reason they invest in the company.
Nationally, we see the utility dividend providing needed income to retirees and the middle class. For instance, Ernst & Young studied tax returns in 2007 and noted the following characteristics of taxpayers claiming the dividend deduction:• 61 percent are from taxpayers age 50 and older,
• 30 percent are from taxpayers age 65 and older,
• 65 percent are from returns with incomes less than $100,000, and
• 36 percent are from returns with incomes less than $50,000.
Our nation's economy is still fragile, and we are not out of the woods yet. Now is not the time to raise taxes on dividends. We need you to let your members of Congress know they should act now to keep the taxes on dividends at 15 percent. To contact your two U.S. Senators and U.S. Representative, go to the Defend My Dividend website at http://www.defendmydividend.org/.
ABOUT THE WRITER
Jim Rogers is Duke Energy Chairman, President and CEO.
McClatchy Newspapers did not subsidize the writing of this column; the opinions are those of the writer and do not necessarily represent the views of McClatchy Newspapers or its editors.