Dividends |
1099 Due Date |
R & E Tax Credit | Section 482 |
Section 475 |
Subpart F |
Tax Straddle |
US-Japan Tax Treaty
SIA Talking Points
ELIMINATION OF PERSONAL INCOME TAX ON DIVIDENDS
IS GOOD PRO-GROWTH POLICY
Half of all Americans invest in equities today. They stand to benefit from the tax break.
An estimated 84.3 million investors own equities through individual stock or stock mutual funds. Roughly 35 million American households receive dividend income that is taxable and will directly benefit from the President's plan. More than half of these dividends go to America's seniors, many of whom rely on these checks for a steady source of income in retirement.
Current tax policy does not result in investors getting the full benefit of the dividends that companies earn.
The Internal Revenue Service taxes a company on its profits, then it taxes the investors who receive the profits as dividends. The result is that for every dollar of profit a company could pay out in dividends, as little as 40 cents can actually reach shareholders.
The President's proposal to eliminate personal income tax on dividends is the right policy at the right time.
Elimination of this tax will encourage more Americans to invest in equities. That demand for equity investments will lower the cost of capital and strengthen our capital markets' ability to raise money to help companies expand. It will reduce corporate leverage on debt as a means by which businesses finance growth. Allowing taxpayers to exclude dividend payments from their taxable income will return about $20 billion this year to the economy, according to the U.S. Treasury Department.
WHAT TO DO NOW AS AN INDIVIDUAL INVESTOR?
The proposal by the President is just that - a proposal - at this point. You should not make any changes in your portfolios based on the proposal but wait until it is enacted. That said, though, you should start reviewing your portfolio and evaluate what the potential impact on your investments may be and whether you should make changes following the elimination of this tax.
It's a good time now to review your portfolio and current tax liability and then assess how your tax costs may change if the personal income tax on dividends were to be eliminated.
