One last, maybe big, dividend payout before the cliff kills us all!!!
The phenomenon of companies accelerating dividend payments in case tax increases go into effect next year came home to the midstate last week when The Bon-Ton Stores Inc. decided to join the party.
For a dividend normally paid out in the first quarter of the fiscal year, the department store company decided the earlier date of Dec. 21 would be a better day, considering what taxes could look like next year.
They are far from alone, and among the others a big name (Costco) is borrowing money to make it happen in a big way. That's because, according to the U.S. Chamber of Commerce, the effective tax rate could nearly triple on dividend income next year.
Maybe this is what the Mayans were predicting? Is this the end of the world?
Just think of it. Investing gets so expensive that people stop doing it, divesting what they have in one last fire sale that makes 1929 look like a speed bump, and the world as we know it grinds to a halt.
Everyone becomes unemployed, with no flow of capital to keep the American financial system afloat. After that, they don't care what their payroll withholdings went up to, because there is no more payroll anyway.
And soon, you'll be in a world where you're wearing handmade leather clothes, where people can climb skyscrapers with views of people pounding corn and putting strips of venison on abandoned highway carpool lanes.
(Yup, that's the movie "Fight Club" – I hereby give credit for my use. It's just too good of a line not to paraphrase.)
OK, now seriously. Everyone is treating this fiscal cliff like something that is bigger than it is. Things will get ugly, then they'll get hammered out or in a few cases people will adjust accordingly, and we'll forget this happened.
Except when people can't remember why else their dividend income next year might be coming up a little light – because some got bumped back into 2012.