Marc Lichtenfeld returned to U.S. News and World Report to explain why the looming “fiscal cliff” is high only if you fall off:
With stocks at their highest level in four years, some pundits, bears and politicians claim that stocks will certainly plunge if the Bush-era tax cuts are allowed to expire on January 1, 2013.
The current tax rate on dividend payments and capital gains is 15 percent. Should the tax cuts expire, dividends and capital gains could be taxed at ordinary income rates. That could be particularly troublesome for retirees who receive a sizeable amount of income from dividends. Those individuals could go from paying 15 percent to over 40 percent depending on their tax bracket.
That’s what is causing some pundits to call for the end of the dividend stock bull market.