What Raising Taxes, Avoiding Fiscal Cliff Mean For Average Investors

President Barack Obama, flanked by National Governors Association (NGA) Chairman, Delaware Gov. Jack Martell, and NGA Vice Chair, Oklahoma Gov. Mary Fallin, at the White House on Tuesday. President Obama and House Speaker John Boehner will push their positions on the fiscal cliff in separate meetings Tuesday with some of the nation’s governors. (Charles Dharapak/AP)

Oracle is the latest company to pay dividend income early to shareholders because of fear that tax rates may rise next year.

Most dividend income is currently taxed at 15 percent. If the Bush era tax cuts expire, dividend income would count as ordinary income and be taxed at the rate the earner is paying on other income.

While that has led to concerns for some investors, Roberton Williams of the Tax Policy Center told NPR that possible higher rates on investment income will not have a significant effect on most Americans.

Eighty percent of Americans report no income from dividends or long term capital gains, and currently more than half of the tax benefit on investment income goes to the top one-tenth of the top one percent of earners.

Guest:

Nathaniel Popper, reporter covering the financial markets for The New York Times. He tweets @nathanielpopper.

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http://twitter.com/seethrufaded elle smith

I found that interview unclear and am more confused than ever. First, where does the $250K cutoff come from? Please clarify–if you make, say $150K a year and have say an income tax level in the high 20s, is it the case that your dividend/investment tax will NOT go up?
Second, if you sell equities now in order to avoid a tax hike, you won’t put it under your pillow, you will re-buy equities. So that objection is meaningless.