Fiscal cliff

[Anonymous]

Hello,

I have read some articles on the web about the fear of the famous Fiscal cliff in the US. Among the consequences, there would be (if the congress does not decide otherwise before the end of 2012) a sharp increase in the taxation of dividends from US stocks. Does this mean that it is better to wait to know more before investing in US dividend-growing stocks or is it really unlikely?

Thank you for enlightening my beginner's lantern.

Jean-Louis

[Jerome]

I think we are still at the assumption stage. If this is confirmed, those who have the most to fear are not growing dividends, but rather high yields, and in particular the telecom and utility sectors. Moreover, it seems that the market is already anticipating this tax increase and that stock prices and high yields in particular are falling. On the contrary, growing dividends are holding up quite well for the moment! And then in the end if stocks fall it is not so bad because it will allow you to buy an annuity at a better price, and to offset a possible increase in US taxes. So a lot of fuss for not much as far as I am concerned.

[herveC]

Good morning
I have just been trying to understand the risks of changes in dividend taxation for Americans.
Solution 1 the current 15% levy does not change and high-income Americans pay a surcharge of 3.8%
Solution 2 dividends are included in taxable income so potentially for the richest 39.6% + 3.8%
Solution 3???
I think American dividend stock holders are middle income people so they won't change their investment strategy.
This is my opinion…
Herve

“The best-case scenario: Congress retains the top dividend-income tax rate of 15%, and the only increase is the scheduled 3.8% surtax on investment income for high earners. The worst case: Congress decides dividends are to be taxed at ordinary-income rates, and the highest rate jumps to 39.6%, plus the same 3.8% surtax. »

[Jerome]

Thanks for this insight herveC.
I don't think that the dividend strategy is the privilege of any particular class of society. But I can't imagine the people concerned completely getting out of dividends. Because ultimately, what investments would that be to move towards? Non-dividend-paying stocks require regular liquidation of part of one's positions for all those who need an income. As for bonds, they have a big problem of loss of value in the face of rising prices. So I think that only very high-yield stocks will be impacted by a measure of this kind. For the moment, the price of stocks paying average and progressive dividends is more than holding up well to these discussions in any case...

[Author]

Posts