The previously scheduled date was January 2, 2013, but if Walmart waits until after the beginning of the new year, shareholders could get stuck paying a higher tax on the dividend. One of the components of the pending fiscal cliff is the return to the Clinton-era 39.6% tax on dividend payments, compared with the current 15% rate. Under Clinton, dividends were taxed as ordinary income, whereas the rate dropped during the Bush administration to the capital gains rate.
Walmart’s move at least provides its shareholders with one more year of the favorable tax rate. Aside from a general statement from many Republicans that they will not support any new tax hikes, not many observers expect the low dividend rate to survive any negotiations related to closing the federal deficit.
Paul Ausick
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