By now we all have heard about the looming “Fiscal Cliff”. If President Obama and the Congress failed to act, a series of serious budget provisions including tax increases and spending cuts will go into effect as of January 1, 2013. The Bush era tax cuts will expire and every one’s tax rates will go up, and payroll deductions will go up resulting less take home pay. These events will lead to disastrous economic events causing job losses, higher unemployment and the economy will go into a recession. Talks between the Obama Administration and the leaders of the Congress started soon after the U.S. Presidential Election but so far no announcements have been made by any participant.
Lot of experts anticipates that there may be an agreement before the end of the year and the so called “Fiscal Cliff” could be avoided. One area that is mostly mentioned lately is increasing the current 15 percent tax rate on dividends. Expecting that will take place on January 1, 2013, more than 59 companies in Russell 3000 Index from Tyson Foods to Winn Resorts are paying a special dividend to its shareholders to help investors stay ahead of the impending tax hike.