Tax Reform Must Encourage, Not Hinder, Capital Formation

As Congress continues to examine comprehensive tax reform, the nation’s investor-owned electric companies are working to educate lawmakers and the Administration about the impact that certain changes to the tax code—particularly changes affecting dividend tax rates and the deductibility of interest expense—could have on our industry’s ability to raise capital. Today, the electric power industry is investing for the future. Our sector has both the highest capital-intensity and absolute capital spending levels of all U.S. industrial sectors, with the industry’s capital expenditures reaching a record $90.5 billion last year alone. Looking ahead, we plan an average annual investment of approximately $85 billion through 2015. These investment dollars are creating a cleaner generation fleet and are enabling the industry to meet a wide variety of new environmental requirements. They are developing a smarter, more flexible, and more resilient grid to meet the growing demands of our digital society. They are also promoting increased electrification, particularly in the transportation sector to improve air quality and reduce our nation’s foreign oil imports. Importantly, these capital investment programs offer a critical source of much-needed, high-quality job creation in many states. Dividend Tax Rates Earlier this year Congress passed the “American Taxpayer Relief Act.” One…

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