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Concerns grow over potential dividend tax hike

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    Defend My Dividend campaign's Nick Akins explains

  • Duration 5:13
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Taxes are about to go up.

We're not the taxes on our dividends though right that's a big part of our retirement.

Its dividends to the -- on our dividends would more than double what we depend on our dividends to help -- our minerals we worked hard to -- Well that commercial is being aired right now on Fox News among other stations.

And it highlights one of the big tax hikes headed your way if lawmakers in the White House don't reach a deal -- -- so called fiscal cliff.

The current tax -- people pay on their dividend income from their investments is 15%.

But -- generate first the top rate could shoot up over 39%.

What with the implications that the joining me now nick -- -- -- defend my dividend campaign he's president and CEO of American Electric Power -- it's great to have you say you're the man behind that ad paid for you like it.

You know dividend income for me you don't have a lot of investments just -- what that is who has dividend income and housing used.

Paid a dividend income comes from investment and they are tops of businesses utility investments are clearly -- -- those areas where we deploy a lot of capital.

And investors invest in our company based upon the constant yield of the divot DN and -- -- -- extremely important particularly for older Americans.

And certainly is an issue for us as we go forward to show that consistency.

Is clearly an issue where where we've got our our shareholders 40% of our shareholders -- an individual investors and they are focused on that dividend yield.

Adding -- is telling me what your opinion I don't seem to care about rich people so are they rich people who are getting their dividend income.

Oh well that that's that's one of the things it's really unclear you know when you have.

Investors -- that many people think -- they're really rich investors but they're not better fact 70%.

The investors and it actually people who filed tax returns with qualified dividends 70%.

Had adjusted gross income of less than a 100040%.

Had adjusted gross income of less than 50063%.

Of those were Americans that fifty years of age and older so it's not just a matter of of the rich as a matter of all of us involved he mutual -- -- direct dividends from the company's.

-- all those things would be affected as result.

So now that the that this tax that people have to -- dividend income is currently at 15% and that's courtesy of that George W.

Bush years.

But that is going to go up on January 1.

If they don't reach a deal on these automatic tax hikes were gonna face now.

President Obama would like -- should go up but you only really wants it to go up to 20%.

Tax.

Yeah and and that's -- the Democrats want his -- are not -- let me let me revise that senate Democrats wanna raise it to twenty present President Obama wanted to be taxed.

As ordinary income.

And that's that's how you get to you know could be up to 39%.

Or more tax depends on where you are on that and the income scale correct.

That's that's correct matter -- -- 15% today and by the way both dividends and capital gains -- 15%.

So.

If you have the change to the fiscal cliff and we go to ordinary in -- for dividends at efforts to 43 point 4%.

Then investors -- -- look at our tops of investments and and make a decision whether they -- to continue to invest to pay the -- taxes associated with it.

Or actually pay in companies that it produce capital gains so.

So that you have to keep parody of those two but also you -- keep the rates low to encourage investment and in our companies but also investment and jobs and job creation goes -- with.

So -- companies like yours and the investors who who put money in them and get this dividend income.

There you're not necessarily gonna be saved if the White House -- lawmakers reach a deal to avoid going off the so called fiscal cliff because.

If -- Obama gets his way those tax hikes are gonna happen even with respect to dividend income.

And -- -- senate Democrats get their way so they get a 5% tax on the income other Republicans arguing to keep it the same at 15%.

Well there is discussions about an increase.

In the dividend tax but that.

It that the issue is it needs to have -- and needs to be -- and afterward doesn't have an impact.

On investors and certainly investors are looking at this saying qualify if I spend a dollar on a -- again if I get a dollar dividend return.

And right now I get 85 cents on the dollar after taxes I don't want to go just near the 6465.

Cents.

And that's that's something dramatically different and I think I think that's the issue -- needs to be dealt with in the overall context.

Nick and keep in mind too that our business and utility industry we need -- -- two trillion dollars in the next two decades just invest in our system to refurbish -- -- and keep a lot zone so it's imperative for us to have investors -- our business.

Otherwise.

They'll be issues this issue -- that as well.

Happening at a -- people and so on and so forth and stuff to do you don't doesn't come -- and nick thanks for your thank you for being here in your thoughts on it.

Thank you Megan.

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