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Tuesday, December 4, 2012

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.

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