What's Happening Now
President Obama has expressed support for keeping the 15 percent maximum tax rate in place for households with incomes up to $250,000 (joint filers) and $200,000 (single) and increasing the rate to 20 percent for those above $250,000 beyond 2010.
The administration’s budget proposal is consistent with that position. Senate Finance Committee Chairman Max Baucus (D-MT) has circulated a draft tax bill that tracks the Obama recommendation regarding the treatment of dividends and capital gains.
What You Should Know
While AGA supports the retention of the 15 percent maximum rate for all taxpayers, the income level at which the 20 percent rate takes effect protects a significant percentage of utility shareholders.
Additionally, the fact that the dividend tax rate is capped at 20 percent is very important because it recognizes that both dividends and capital gains should be taxed at rates that are lower than the maximum individual rates. Should Congress fail to act on this matter, dividends would be taxed as ordinary income, and the maximum tax rate on dividends could be as high as 39.6 percent.
For more information or to join Defend My Dividend, please visit the campaign's website.