Please Support the Dividend Tax Cut Extension

Dear AEP Retiree,

One of the more contentious issues that Congress faces before the end of the year is the expiration of tax cuts on the dividends paid by corporations to their shareholders. Those reductions, first passed in 2003, will expire at the end of 2012 if Congress takes no action. 

As a company that pays dividends to its common shareholders, AEP would be directly affected if this tax is allowed to increase. The value of our stock likely would decline because investors will have to pay more taxes on their dividends. As an AEP retiree, you may be affected as well if you own stock through our 401(k) retirement account, through the direct stock purchase plan, or through some other means. 

All stocks that pay dividends will be in the same situation, including those held by mutual funds, other 401(k) retirement accounts and IRAs. So, if you have investments outside of AEP stock, those would be affected, too. In fact, tens of millions of Americans across all income levels would be hurt by this increase. 

Under current law, the tax on corporate dividends is capped at 15 percent. However, if that law expires, the dividend tax will return to the individual taxpayer’s marginal rate, which could be as high as 39.6 percent. That’s almost a three-fold increase. 

It’s no secret that our economy is struggling to recover from the recession of 2008. Unemployment is stuck above 8 percent and job growth has been meager. Our commercial load recovery has been tenuous at best. The nation is fighting to maintain even a modest growth rate. Now is not the time to increase taxes.

The U.S. House plans to vote later this summer to extend the dividend and capital gains tax reductions. Please contact your U.S. representative and senators through the Defend My Dividend website at http://www.defendmydividend.org/aep/Pages/default.aspx to urge them to support us in this critical cause.

AEP retirees have always been leaders in helping public officials understand our issues. Your willingness to support our company is one of the reasons why I take such great pride in working for AEP. Thank you for your support.

Sincerely,

Nick Akins
AEP president and chief executive officer