Transcript Edison Electric Institute Dividend Briefing

Dividend Tax Briefing
Fall 2010
Lower Dividend Tax Rates
Will Expire December 31
 Congress passed a law in 2003 that temporarily reduced tax rates
on dividends
2010 Dividend Tax Rates by
Ordinary Income Tax Rates*
Ordinary
Income Rates
Dividend Rate
If Congress allows current
rates to expire:
2011 Dividend Tax Rates by
Ordinary Income Tax Rates*
10%
0%
Ordinary
Income Rates
Dividend Rate
15%
0%
15%
15%
25%
15%
28%
28%
28%
15%
31%
31%
33%
15%
35%
35%
35%
15%
39.6%
39.6%
* Married individuals filing joint returns.
 Current capital gains tax rate is 15%; maximum tax rate will rise to
20% at end of year if Congress does not extend current rates
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Our Objective
 Stop a dividend tax hike for everyone.
 Retain lower dividend tax rates for all taxpayers.
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Talking Points
 The maximum tax rate on dividend income will soar as much as
164%—from 15% to 39.6%—if Congress doesn’t act to stop a
dividend tax hike.
 27 million Americans from all income levels and age groups directly
own stocks that pay dividends. Tens of millions own dividend-paying
stocks indirectly through pension funds, 401(k) plans, IRAs, mutual
funds, or life insurance policies.
 Raising dividend tax rates to previous levels will 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 dividend4
paying investments.
Talking Points
 Raising dividend tax rates would disadvantage the largest dividendpaying sectors, such as 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 just 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.
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Media Coverage
Changing the Conversation
Don’t Let Tax Cuts Editorial
Hold off on tax increases
Expire At Year-End
By Senator Johnny Isakson
July 27, 2010
Higher Taxes on Dividends
Will Discourage
Investment and Retard
Economic Recovery
August 9, 2010
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while the economy lags
August 7, 2010
Now Not Time to
Raise Dividend Taxes
By Anthony F. Earley, Jr.
August 10, 2010
Hiking tax rate will
One
Nation,
Two
really hurt Floridians
By Lew Hay
September 4, 2010
Deficits
By Peter Orszag
Former White House Budget Director
September 6, 2010
Experts Continue To Weigh In
Keeping Tax Cuts
Beneficial in Short Term,
Harmful Over Long
Term, CBO Says
August 20, 2010
“… permanently extending tax cuts
put in place under President
George W. Bush would provide a
‘considerable’ economic boost over
the next several years ...”
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One Nation, Two
Deficits
By Peter Orszag
September 6, 2010
“In the face of the dueling
deficits, the best approach
is a compromise: extend
the tax cuts for two years
and then end them
altogether.”
Contentious Political Debate

“The fact is, we have to be acting in a fiscally sound way. And we
can't afford those [tax cuts]. We never could.”
– House Speaker Nancy Pelosi (D-CA)


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“At a minimum, the House will not extend the tax cuts
benefiting taxpayers of incomes above $250,000 despite
some suggestions in the Senate that they be extended along
with all other Bush tax cuts.”
– House Majority Leader Steny Hoyer (D-MD)
“I am concerned that extending capital gains and dividends tax
relief would provide limited benefits to those taxpayers who need
them most while burdening our children with a mountain of debt.”
– Senate Majority Whip Dick Durbin (D-IL)
Stakeholder
Outreach
Results
Contentious
Politicaland
Debate
 “As a general rule, you don’t want to be cutting spending or raising taxes in the
midst of a downturn.” – Senate Budget Committee Chairman Kent Conrad (D-ND)
 “We don’t need to raise taxes now… We don’t need added uncertainty,
added burdens on business right now.” – Senator Evan Bayh (D-IN)
 "My fear is that not extending those tax cuts is equivalent to instituting a tax increase
at a very critical and challenging time for the economy. I will vote to extend those tax
cuts for some period down the road." - Senator Ben Nelson (D-NE)
 “In a recession, you don’t tax, burden and restrict. The economy is like
a ship, and if you sink the ship, all the good you might do goes down with it.”
– Representative Bobby Bright (D-AL)
 “Given the unique economic difficulties we face as a nation, this is the wrong time to
raise these taxes. We need to retain these tax cuts that encourage investment that
stimulates growth and job creation.” – Representative Harry Mitchell (D-AZ)
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Legislative Update
 Rep. John Adler (D-NJ) and 47 Democrat House members
sent letter to Speaker Pelosi supporting extension of
current dividend and capital gains tax rates
 Legislation to extend current tax cuts introduced by
Minority Leader Mitch McConnell (R-KY)
 Senate Finance Committee Chair Max Baucus (D-MT) likely
to introduce legislation that echoes President Obama’s plan
 Congress out until after November elections
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The Challenges
“President Obama on
Wednesday will rule out
any compromise that
would extend the Bush-era
tax cuts for the wealthy
beyond this year, officials
said, adding a populist
twist to an election-season
economic package that is
otherwise designed to
entice support from big
businesses and their
Republican allies.”
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Obama Will Not
Extend Bush-Era Tax
Cuts to Wealthy
September 8, 2010
Defend My Dividend
Take Action Center
now offers an easy
option to call your
Members of
Congress, at
1-877-781-4688.
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