I love satellite radio. Worth every penny.
--H.L. Mencken.
Of those expecting a refund, 44% said they plan to stash some of it in savings, up from 42% last year, according to a survey of more than 8,700 consumers by the National Retail Federation. That marks the highest percentage in the survey's nine-year history.Generally speaking, I consider that to be good news. The bad news is that the rate of return on plain vanilla savings accounts is negative. If you put your return toward paying off the right kind of debt, however, the return can be quite high.
Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate...Maybe that will make Buffett happy. Or, watch for Warren to be mysteriously silent on this one.
...Who would get hurt? IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.
But all American shareholders would lose. Higher dividend and capital gains taxes make stocks less valuable. A share of stock is worth the discounted present value of the future earnings stream after taxes. Stock prices would fall over time to adjust to the new after-tax rate of return. And if investors become convinced later this year that dividend and capital gains taxes are going way up on January 1, some investors are likely to sell shares ahead of paying these higher rates.