by Gary Yaquinto — Nov. 19, 2012 12:00 AM

My Turn

The ripple effect of what Washington, D.C. does, or does not do, about the fiscal cliff will have ramifications throughout state capitals, every sector of our economy, and in the pocketbooks of families and businesses across the country.

The current federal tax rates on investment income — dividends and long-term capital gains — are capped at 15 percent. Those rates are set to expire at midnight on Dec. 31 — and if they do, the rates on capital gains will go as high as 23 percent and the top tax rate on dividends will rise to 43.4 percent. With uncertainties hanging overhead, investors are becoming increasingly concerned about what to do with their investments.

The most direct impact would be on the 25 million Americans who invest directly in dividend-paying stocks. Within this group, many are seniors.

The companies that pay dividends tend to be more reliable and stable. Stability and the quarterly payout make these companies especially attractive to seniors who often need help supplementing their income. This is especially true today when traditional investment vehicles are yielding little to no gains. Seniors rely on this additional income from dividends to help pay the bills — rent, health care, food and other expenses.

The next group to feel an impact on higher dividend taxes would be those who invest in mutual funds and have retirement accounts, pension plans and life-insurance policies. These investment vehicles aren’t directly taxed and therefore often dismissed by policy makers as not being relative to the tax-rate situation. But a looming tax increase would likely cause investors to divest from the market before Jan. 1 to take advantage of the lower tax rate. When those investors sell off stock, the price declines result in a negative impact on all those who own that stock — whether directly or indirectly.

The industry sectors impacted by a higher dividend tax span our economy — utilities, telecommunications, pharmaceuticals and manufacturers. Not only are these sectors key dividend-paying companies, they are also some our nation’s largest employers and taxpayers. These companies rely on shareholders for a significant part of their financing for growth and expansion. Increased taxes on dividends would slow our economic recovery and hurt job growth.

The interconnectedness of the economy is greater now than it ever has been. Congress and President Barack Obama need to understand this and be mindful of your retirement savings as they try to reconcile the federal government’s spending habits.

A national grass-roots campaign can help you do so. More information is available at defendmydividend.org/ausa .

Extending today’s dividend tax rates for one year for all taxpayers is good for Arizona’s economy, businesses, retirees and families.

Gary Yaquinto is president of the Arizona Investment Council.