Sharply raising the federal tax rate on dividend income will ultimately hurt taxpayers at all levels and also discourage the availability of capital needed for utilities to modernize their energy infrastructure, Edison Electric Institute President Tom Kuhn said today, reacting to the Obama administration’s 2013 budget blueprint.

“We are very disappointed in the Administration’s treatment of dividend income in its 2013 budget,” said Kuhn, noting that for nearly a decade, dividend and capital gains tax rates were kept low and linked. “The President’s proposal would end that parity and badly skew federal tax policy in favor of capital gains at the expense of dividends, which will certainly hurt the electric utility sector, which is very capital-intensive.”

The Obama administration 2013 budget plan calls for taxing dividends as ordinary income for households with adjusted gross incomes of more than $250,000, while capping the top capital gains tax rate at 20 percent. Adding in the new Medicare tax on investment income would bring the top tax rate on dividend income to almost 44 percent.

“That is terrible news for anyone who relies on dividend income, and it disadvantages dividend-paying industries that rely on equity investments in capital markets to create jobs and boost economic growth,” Kuhn said. He added, “We urge President Obama to recognize the importance of maintaining parity in taxing dividends and capital gains.”