CHARLOTTE, N.C., Dec. 12, 2012 /PRNewswire/ -- Much has been said
in Congress and the media about how the "fiscal cliff" could affect
the US economy. If Congress fails to act before the end of this
year, not only will investors in all income brackets be affected;
companies and communities also will feel the negative impact.
The fiscal cliff is a combination of expiring tax cuts and
across-the-board government spending cuts scheduled to become
effective January 1, 2013. Tied to
the fiscal cliff is a plan to significantly increase the tax rate
on dividend income.
I visited Capitol Hill recently with other utility chief
financial officers to urge members of Congress to act immediately
to resolve this economic uncertainty. We also stressed the
importance of parity in tax rates between dividends and capital
gains.
As part of the fiscal cliff, the tax rate on dividends will
increase from 15 percent to as high as 43 percent. The tax rate for
capital gains, while increasing, will be capped at 24 percent.
Simply put, the tax code—regardless of your income tax
bracket—would make your $1 investment
in a growth stock much more appealing after taxes than the same
$1 in Duke Energy stock.
Congress should not pick winners and losers between growth
stocks and dividend-paying stocks in terms of tax rates.
Why this matters to everyone
Nearly 60 percent of utility stocks are owned by people who have
incomes of less than $100,000,
according to a recent Ernst & Young study.
Allowing the dividend tax to expire will be costly for all
classes of investors, regardless of their income level. If
lawmakers fail to extend the current tax treatment, the tax rates
on qualified dividends will increase by as much as 164%.
Without the extension of the dividend tax treatment,
shareholders could pay—in taxes— as much as 40 cents of every $1 received in dividends from Duke Energy.
Fair dividend treatment benefits consumers
A decrease in the value of Duke Energy stock will not only
affect investors who hold shares in tax-free retirement accounts
but also will likely increase our company's borrowing costs.
That, in turn, could increase the cost of critical
infrastructure projects currently planned by our company to
modernize our power plants and energy distribution system.
And that, in turn, could impact the customers and communities we
serve.
Long-term investors are an essential part of the utility
business. They provide capital that allows our company to meet its
mission of delivering energy that's reliable, affordable and
increasingly clean.
Contact your representatives in Congress and urge them to take
action before the end of the year.
You can e-mail or write your members of Congress through Defend
My Dividend at www.defendmydividend.org, or call 888-443-5863.
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CONTACT:
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Jennifer Zajac
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Phone:
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980-373-9242
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24-Hour:
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800-559-3853
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SOURCE Duke Energy