Among the factors aiding the rebuilding of the American economy is the current 15 percent tax rate on dividends — payments taken out of the profits a company makes, which are then distributed to shareholders. Dividends attract and keep more investors and their capital and, in turn, drive growth and create jobs.

But that rate is set to expire at the end of the year and will be replaced with much, much higher rates.

This could be disastrous to America’s economy. The new tax rates will be so much higher that they could significantly discourage new investment, and may even encourage existing shareholders to withdraw capital from a company in order to take advantage of lower-taxed assets.

Also, the tax rates will impact middle-class Americans as much, if not more, than higher-income individuals. According to IRS Statistics of Income, 68 percent of those receiving dividend payments earn less than $100,000, and 40 percent earn less than $50,000. The majority of shareholders are actually seniors whose retirements are often built around these dividends. Not only will these people be penalized with taxes, but their stock will likely be devalued by chasing away other investors.

These consequences could stop the economic recovery in its tracks. Congress must put aside partisan politics and act as quickly as possible to preserve the present rate on dividend income.

Marc Vanderwood, Oxford

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