On December 31, 2012, the United States Senate passed the American Taxpayer Relief Act in a vote of 89-8, moving it to the United States House of Representatives, where it passed with 257 votes on January 1, 2013.
In a major victory for utility companies, as well as all dividend- paying companies, The American Taxpayer Relief Act will preserve and make permanent 15 percent tax rates for dividends and capital gains for individuals earning up to $400,000 or couples earning up to $450,000. Dividends and capital gains for families who earn more than $450,000 will be taxed at 20 percent.
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. These lower tax rates will help utilities expand and rebuild their infrastructure, in turn, helping to meet the nation’s energy needs and deliver on the promises of clean, affordable and domestic natural gas for our economy, environment and national security.
Keeping dividend tax rates low has been a key advocacy priority for AGA, and AGA’s members have been committed to working with Congress to not only emphasize the importance of low dividend tax rates and parity between dividends and capital gains, but to maintain and make permanent these low rates.
Through Capitol Hill fly-ins, the Defend My Dividend campaign and a variety of other advocacy efforts, we have worked to stress the critical nature of these issues and what they mean for our economy, investors, retirees and industry.
On April 15, 2013, AGA also submitted comments to the U.S. House of Representatives, Ways and Means Committee, Energy Tax Reform Working Group. AGA’s comments discuss the impacts of tax costs on regulated natural gas utilities and their customers and identify tax policy priorities for the industry. AGA’s comments note that (i) parity between dividends and investment income taxes drives economic growth, (ii) gas utilities rely on the corporate interest deduction to access affordable capital, (iii) tax policies that protect deferred taxes incentivize gas utility investments, and (iv) tax policy changes impacting depreciation, should protect deferred taxes. AGA’s comments emphasize that favorable tax policy for natural gas will drive economic growth, and request that Congress consider tax reform initiatives that allow AGA members continued access to affordable capital that is required to sustain and enhance the infrastructure that delivers natural gas throughout the United States.