Skip Navigation Links
Legislative Report - July 2006
Legislative Report - June 2006
Legislative Report - May 2006
Legislative Report - March 2006
Legislative Report - February 2006
Legislative Report - January 2006
Legislative Update: Conferees Sign Tax Reconciliation Package Extending Current Dividend & Capital Gains Rates
Legislative Update: Congress Votes to Fund LIHEAP at Highest Level Ever
Legislative Update: Dividend and Capital Gains Taxation
Legislative Update: Dividend and Capital Gains Taxation (April 2006)
Legislative Update: Employee/Executive Letters for OCS Supporters
Legislative Update: Important OCS Action This Week - Take Action
Legislative Update: OCS/Interior Appropriations Expected May 18
Legislative Update: Offshore Access Legislation in the 109th Congress
Legislative Update: Senate Budget Measure Boosts Prospects for ANWR Exploration
Legislative Update: Senate Energy & Natural Resources Committee Passes Area 181/Oil & Gas Leasing Legislation
LIHEAP Update Summer 2006
Pipeline Safety Bill Passes by the House Transportation and Infrastructure Committee
The Deep Ocean Energy Resources (DOER) Act
Natural Gas and the Environment (INC)
Access to Supply Issue Resources
Low Income Energy Assistance
Dividend and Capitol Gains Taxation
Submit Comments on Proposed OCS Natural Gas and Oil Leasing Program 2007-2012
Natural Gas Pipelines: Safe, Sound and Underground

 Dividend and Capitol Gains Taxation 

In 2003, the federal tax rate on dividends and capital gains paid to individual taxpayers was reduced to a maximum of 15 percent. This reduction was effective through December 31, 2008. On May 17, 2006, the President signed HR 4297 into law, providing for a two-year extension (until 12/31/10) of the lower tax rate on dividends and capital gains. Most energy utilities that deliver natural gas have a history of paying regular dividends, many without interruption for decades or even longer. Thus, this reduced tax rate is a significant benefit to natural gas utility shareholders.

Dividends are taxed twice, once at the corporate level and then again at the individual taxpayer level. Dividend-paying companies and their shareholders are, therefore, penalized in relation to other types of investments. Reducing the tax on dividends was intended in part to address this inequitable double taxation.

Reducing the tax rate on dividends has been a benefit for energy consumers by making energy utilities a more attractive investment. These investments have helped provide utilities with part of the estimated $100 billion they will need during the next 20 years to expand their pipelines and other infrastructure to meet the growing demand for natural gas.

The November 2007 elections and the decision to enforce the "Pay as you go" standard for tax legislation will make extending any tax break such as this one much more difficult. The "Pay as you go" standard requires that any tax provision that costs the federal government revenues must be offset with other provisions that raise an equal amount of revenue.

The lowering of the tax on dividends has been one of AGA's top priorities for years. We will continue to work to make this provision permanent.

Resources and Updates

Legislative Update - Dividend and Capitol Gains Taxation (March 2006)


Join the Energy Conversation