Possible Tax Change Spurs Special Dividends (Businessweek)

Cash-rich companies are initiating one-time payments to investors.

The combination of a possible hike in the federal tax on dividends and the boatloads of cash held by corporations is leading to a proliferation in one-time special dividends being paid to investors, Businessweek reports. 

Currently, individuals are taxed just 15% on dividend payments but if tax cuts put in place under George W. Bush expire at the start of next year, that rate could rise to more than 43%. So as year-end approaches, companies are responding with special dividend payments. The story notes that companies made similar payments in the fourth quarter of 2010, when there were also concerns that the Bush tax cuts might expire.

 

See the full story here. For previous coverage, see Tax Hike Could Discourage Dividend Revival.

 

 

 

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