Dividend Tax Hike Will Hurt Millions of Americans

A sharp increase in dividend tax rates scheduled to take effect January 1 will hurt tens of millions of Americans who rely directly and indirectly on dividends, according to a new study prepared for EEI by the accounting firm Ernst & Young. The analysis shows that a dividend tax hike will impact Americans at all income levels--and older investors who are at or nearing retirement age will likely be hurt the most. Release of the study comes just weeks before an expected House vote on whether to extend the current federal income tax rates, including the tax rate on dividends.

"Dividend income benefits millions of Americans who are not wealthy, including many seniors and those investing for the future of their families," said Lew Hay, chairman of EEI and executive chairman of Juno Beach, Fla.-based NextEra Energy. "Raising taxes on dividends would harm every American who owns dividend-paying stocks, as well as anyone who has an interest in a mutual fund, 401(k) plan, pension plan, or life insurance policy that invests in those stocks." The current 15-percent tax rate on dividends will expire on December 31, unless Congress and the President intervene.

Source: Market Watch

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