No. of Recommendations: 7
What if Berkshire doesn't find enough good investments over time and the cash builds up to 600 Billion in today's dollars? And finally at that point, it decides to initiate a dividend? That could be a lot of dividend tax to pay. At some point, at the margin,it may make sense to initiate a dividend sooner rather than later in order to get that money dispersed.
Never assume that the lower tax rate on dividends is permanent. It could be politically popular to repeal the Qualified Dividend Tax Rate someday with how the budget projections already look.
No. of Recommendations: 5
Assuming the change in the dividend tax rate is not retrospective, there will be time to institute a special dividend before the new rate comes into effect. No need to do so in anticipation.
There are already several dividend tax rates, qualified dividend rates of 0, 15, 20 (plus the 3.8% Medicare supplement) and non-qualified rates at ordinary income tax rates. Rather than abolish the qualified rate, more likely Congress will fiddle with the income thresholds for the various rates.
And given the outside political influence the dividend earners have on the body politic of this country, I wouldn’t hold my breath waiting for it to happen.
Remember the Carried Interest Loophole, which disproportionately helps the 1%, and the many calls for it to be abolished.
