Rising Taxes On Dividend Income Are Coming

An article in Friday's "Wall Street Journal" bemoaned the fact that taxes on dividends could rise dramatically by the end of the year. The recent health-care bill includes a 3.8% surcharge on all investment income, including dividends, beginning in 2013. This would nearly triple the top dividend rate to 43.4% in Mr. Obama's four years as President. While these changes to dividend taxation are not yet the law of the land and the details may change by January 1, 2011, there is now ample evidence that the Bush dividend tax breaks enacted in 2003 will be allowed to die.

dividends for most of my 35 years in the investment business have been taxed at ordinary income rates. So the the new taxes are not really new but merely a return to the old way dividends were taxed prior to 2003. The tax breaks of the past 7 years have been a blessing, but with the runaway government deficits this country is experiencing, it is too much to expect that President Obama would hold to his campaign promise of only hiking the tax on dividends to 20%.

Source: Rising Dividend Investing


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