Is Obama Trying To Kill Dividend Stocks?

It’s interesting to see that despite all of the commentary and analysis about dividend investing taking place in the blogosphere, so little is being said about the impacts that letting the Bush tax cuts expire would have on dividend investors. I personally feel that it should be discussed. That being said, if the current dividend taxes that the Bush tax cuts took down to 15% do end up expiring, that will mean major changes for everyone that pays over 15% of income taxes (vast majority of you I would assume?). Now of course, this would only apply to dividends paid out in taxable accounts so some dividends that we own would not see any impacts. But what about everything else?

The biggest point for me, especially when dividend taxes are concerned is the fact that the reason these tax cuts were made in the first place was to diminish double taxation. If you are not aware, the double taxation comes from the fact that the companies pay out amounts on which they’ve already paid taxes, “after tax earnings”. That is why many including myself believe that dividends should be taxed at a minimal rate if at all, to diminish this double taxation. The fact that some investors will end up paying nearly 40% of taxes on those dividend revenues after the company also paid taxes on those amounts seems unfair.

Source: Seeking Alpha

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