Starting January 1 of 2013 the top tax rate on dividends in the U.S. will officially become the highest in the developed world. If you live in N.Y., for example, the top rate on stock dividends will be close to 50% - which is significantly higher than France. Capital gains tax will also increase from 15% to 25%. Many in the U.S. will of course say "great, tax those fat cats". But there are a few problems this policy.
Savers have been penalized by the Fed for holding cash and now they will be punished by the government for owning high dividend stocks. According to J.P. Morgan (JPM), this dividend tax will reduce mature firms' valuations by $1.5 trillion. Many firms will choose share buybacks instead of dividends. That hurts those who rely on dividend stream for income (such as retirees). Smaller firms will have a tougher time raising capital due to the increase in capital gains tax. That will have a direct spillover into job creation.
Source: iStockAnalyst
Related Articles:
- 9 Dividend Stocks With A Low P/B Ratio
- 10 Dividend Stocks Beating the S&P With Positive Returns
- All Investments Carry Risk
- 9 Stocks Delivering The Dividend Dream
- 10 Quality Dividend Stocks Trading Below Their Fair Value
Top Dividend Tax Rate Will Become the Highest in the World
Posted by D4L | Thursday, October 11, 2012 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
When looking for dividend stocks to invest in, it is advisable to choose companies that have strong dividend histories and stable balance sh...
-
A good dividend stock has more than a high yield. Dividends need to be supported by cash flow, and cash flow depends on the long-term streng...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.