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Congress Needs to Act Now to Avoid the Fiscal Cliff

             Congress Needs to Act Now to Avoid the Fiscal Cliff

By Lynn Good, Duke Energy Executive Vice President and Chief Financial Officer

PR Newswire

CHARLOTTE, N.C., Dec. 12, 2012

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 Energystock 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.

CONTACT: Jennifer Zajac
Phone:   980-373-9242
24-Hour: 800-559-3853

SOURCE Duke Energy

Website: http://www.duke-energy.com
 
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