Most anyone who has been awake for the past year and half expects dividend taxes to increase from the current top rate of 15%. But it appears rates could sky-rocket. An editorial in the Wall Street Journal today discusses the Senate’s proposal for dividend taxes: “Last week the Senate Budget Committee passed a fiscal 2011 budget resolution that includes an increase in the top tax rate on dividends to 39.6% from the current 15%—a 164% increase. This blows past the 20% rate that President Obama proposed in his 2011 budget and which his economic advisers promised.” (“The Dividend Tax Bill Arrives: Democrats would nearly triple the top rate”, WSJ, 4/29/2010).
If you are an advisor, how are you preparing clients for the coming increases? Business owners, have you changed your distribution policies for this year in anticipation of higher taxes?