12-06-2012, 01:46 PM
Zirak Wrote:Actually I thought folks were doing this because of the imposition of a dividend surcharge imposed by Obamacare starting in 2013.
It's a double whammy combo, but the Obamacare side only affects the upper class.
The surcharge revolving around Obamacare is 3.8% on dividends for households making over $250k.
But if nothing is done with the dividend provision of the fiscal cliff the distinction between an ordinary and a "qualified" dividend goes away, which is taxed at a lower rate of up to 15%. Ordinary dividends are taxed according to your bracket. So you are talking about basically DOUBLING the taxes you pay on any qualified dividend. (Qualified simply means you hold on to the dividend for more than 60 days)
The latter situation is horrible to me, and is a huge tax hike on middle class people of our generation who are almost entirely reliant on our 401ks for retirement.
Taxing dividends is a joke. They are corporate profits that are already taxed. Then they tax you on it, when you get it. Then you get taxed AGAIN on whatever amount is sold as income!