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发帖数: 17225 | 1 Investors Rush to Beat Threat of Higher Taxes
By NATHANIEL POPPER and NELSON D. SCHWARTZ
Business owners and investors are rapidly maneuvering to shield themselves
from the prospect of higher taxes next year, a strategy that is sending
ripples across Wall Street and broad areas of the economy.
Daniel Rosenbaum for The New York Times
Kristina Collins, a chiropractor, is monitoring her business income.
Related
Business Chiefs Step Gingerly Into a Thorny Budget Fight (November 12, 2012)
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Chris Keane for The New York Times
Dyke Messinger is holding back on hiring for his business.
Take Steve Wynn, the casino magnate, who has been a vocal critic of higher
tax rates. He and his fellow shareholders in Wynn Resorts, the company
announced, will collect a special dividend of $750 million on Tuesday, a
payout timed to take advantage of current rates. Experts estimated that
taking the payout this year instead of next could save Mr. Wynn, who owns a
sizable stake in the company, more than $20 million.
For the wealthy like Mr. Wynn, the overriding goal is to record as much of
their future income this year as they can. This includes moves as diverse as
sales of businesses, one-time dividends and the sale of stocks that have
been big winners.
“In my 30 years in practice, I’ve never seen such a flood of desire and
action to transfer a business and cash out,” said Kenneth K. Bezozo, a
partner in New York with the law firm Haynes and Boone. “We’re seeing a
watershed event.”
Whether small business owners or individuals saving for retirement,
investors are being urged by their advisers to reconsider their holdings.
Along the way, many are shedding the very investments that have been the
most popular over the last year, contributing to recent sell-offs in
formerly high-flying shares like Apple and Amazon.
Investors typically take profits in their own portfolio at year-end, but the
selling appears to be more targeted this year. Stocks with large dividends,
for instance, are seen as less attractive because of the perceived
likelihood of a sharp increase in the tax rate on dividends.
All this is weighing on the broader financial markets, as worries mount
about the economic drag from the combination of higher tax rates and reduced
government spending set for January if President Obama and Senate
Republicans cannot reach a budget compromise before then.
Fears about the fiscal impasse in Washington, along with anxiety about
fading corporate profits and weakening economies abroad, have pushed the
benchmark Standard & Poor’s 500-stock index down about 5 percent since the
election. On Friday, major stock indexes had their best showing of the week
after President Obama and Republican leaders signaled that a compromise was
possible.
Even if many of the tax breaks scheduled to expire survive a new budget deal
, some business owners and investors are bracing for substantial increases
in specific areas of the tax code.
The top rate on dividends, for example, could climb to 39.6 percent from 15
percent if no action is taken. Capital gains taxes, which now top out at 15
percent, could rise above 20 percent, many financial advisers say. Most
investment income will also be subject to a 3.8 percent charge to help pay
for President Obama’s health care law.
Stocks that pay big dividends have been popular in recent years among
investors eager for an alternative to the meager returns on bank savings
accounts and Treasury securities. Since October, though, the two sectors
that provide the most generous dividend payments — utilities and
telecommunication stocks — have been among the worst performers, hurt also
in part by the devastation of Hurricane Sandy on the East Coast. Utility
companies in the S.& P. 500 have fallen 9.4 percent from their highs in
October. Telecommunication stocks in the index have dropped 11.3 percent
from theirs, compared with the broader index’s 6.8 percent decline from its
recent high.
John Moorin, the founder of a medical equipment company near Indianapolis,
said he sold about $650,000 in dividend-paying stocks like McDonald’s and
Coca-Cola a few days after the election, worried about the potential
increase in taxes.
“I love these companies, but I’m so scared that now all of the sudden I’m
going to get taxed at such a rate with them that they won’t be worth
anything,” Mr. Moorin said.
Although Mr. Wynn has declared special dividends at the end of the year
before — most recently in 2011 — in a call with analysts last month, he
hinted that higher taxes would cause him and other chief executives to
rethink big payouts in future years.
In the meantime, he added, it was “very difficult to do long-range planning
with a government that moves as much as this does on so many issues.”
Leggett & Platt, a diversified manufacturer based in Carthage, Mo., decided
to move up payment of its fourth-quarter dividend to December from January
so shareholders could take advantage of the lower rate.
“If we can help our shareholders avoid taxes and keep more of their
dividends, we’ll do it,” said David M. DeSonier, senior vice president for
corporate strategy and investor relations
While negotiators are trying to find ways to raise more revenue for the long
term, some experts expect a substantial bump in tax collections in the
short term as investors take a multitude of steps now that they would have
taken in future years. After the top tax rate on capital gains rose to 28
percent from 20 percent at the end of 1986, federal receipts from such gains
doubled to $52.9 billion in 1987, as sales surged at the end of the
previous tax year.
Related
Business Chiefs Step Gingerly Into a Thorny Budget Fight (November 12, 2012)
The potential jump in tax rates has been telegraphed for months, but many
investors say they did not respond sooner because they were waiting to see
if Mitt Romney would defeat the president and move forward with his
commitment to keep rates at current levels. President Obama, since defeating
Mr. Romney, has continued his call for an increase in marginal tax rates on
the wealthy. A growing number of Republican leaders have conceded that some
increase is now likely.
Kristina Collins, a chiropractor in McLean, Va., said she and her husband
planned to closely monitor the business income from their joint practice to
avoid crossing the income threshold for higher taxes outlined by President
Obama on earnings above $200,000 for individuals and $250,000 for couples.
Ms. Collins said she felt torn by being near the cutoff line and
disappointed that federal tax policy was providing a disincentive to keep
expanding a business she founded in 1998.
“If we’re really close and it’s near the end-year, maybe we’ll just
close down for a while and go on vacation,” she said.
Of the potential changes in the tax code set to take place on Jan. 1, the
scheduled increase in the tax rate on capital gains would hit a particularly
broad range of investments.
Business owners, for instance, can lock in the current top rate of 15
percent on capital gains if they sell their company before the end of the
year. The capital gains tax also applies to increases in the value of stocks
and other securities, encouraging some investors to sell holdings that have
done well. This is one of several factors cited in the recent plunge in the
price of Apple shares. They have dropped 26 percent since mid-September
after rising 73 percent earlier in the year.
The coming changes have not hurt all assets. Municipal bonds have become
more attractive because they are exempt from most federal taxes, including
the new surcharge related to President Obama’s health care law. Frank
Fantozzi, a financial planner in Cleveland, is recommending that his wealthy
clients increase their allocation to municipal bonds from around 30 percent
to about 40 percent.
But the potential effect of the scheduled tax increases and government
spending cuts has been mostly negative. Many market strategists have
suggested trimming overall holdings of risky assets like stocks, and
business executives are proceeding very cautiously.
Some business owners say they are holding off on hiring plans because they
expect tax rates to rise. Dyke Messinger, chief executive of Power Curbers
in Salisbury, N.C., said he would like to fill four slots at his
construction equipment company but would only hire three people because he
anticipated that his tax bill would rise by $100,000.
“It’s not a huge amount of money,” Mr. Messinger said. “But it’s enough
money that you don’t want to make a misstep.”
http://www.nytimes.com/2012/11/19/business/investors-rush-to-be |
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