Companies Seek to Beat Obama Tax Increases

Monday December 10, 2012 5:24 PM - 4 Comments

obama-eatingThe wealthy look set to enjoy a windfall in the closing weeks of the year as companies push money out the door to beat the higher tax rates advocated by President Barack Obama.

More than 150 companies, from Costco Wholesale Corp. toLas Vegas Sands Corp. (LVS), have declared special dividends totaling about $20 billion this quarter to avoid anticipated tax increases in 2013, according to data compiled by Bloomberg. Others, including law and private-equity firms, probably will pay bonuses, partnership distributions and commissions early for tax reasons, according to Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.

“We’re going to have a big jump in household income in the fourth quarter” said Crandall, whose company is a subsidiary of ICAP Plc, the world’s largest broker of transactions between banks. “It’s going to be in excess of $50 billion.”

Much of that will go to upper-income Americans, the very people Obama has targeted to pay higher taxes, including Las Vegas Sands controlling shareholder and Chief Executive Officer Sheldon Adelson.

Of the $123.6 billion in qualified dividends reported to the government for 2009, about 52 percent was received by those making more than $250,000 for the year, according to the latest data available from the Internal Revenue Service.

Americans working on the production line are not seeing the kinds of gains the rich are enjoying. Average hourly earnings for production workers rose 1.3 percent in the 12 months to November after a 1.2 percent increase the prior month, the weakest since Labor Department records began in 1965.

‘Less Equal’

“This is just another indication of how incredibly unequal the income distribution has become over the past 28 years,” said Josh Bivens, research and policy director at the Economic Policy Institute, a Washington group that says it focuses on the economic condition of low- and middle-class Americans. “Wages are less equal than they used to be and capital income is less equal than it used to be, and there’s been a shift from labor income to capital income.”

The money won’t have much impact on consumer spending or economic growth because the wealthy are more likely to save rather than spend it, said Michael Feroli, chief U.S. economist for JPMorgan Chase & Co. in New York.

“If they really wanted to spend, they would have spent by now,” the former Federal Reserve economist said.

Casino Dividend

Costco’s dividend of about $3 billion was the largest announced in the fourth quarter as of Nov. 28, exceeding a $2.3 billion payment from Las Vegas Sands, according to a report by Citigroup Inc. strategist Erin Lyons. The payment from Las Vegas Sands would give Adelson $1.2 billion, according to Bloomberg calculations.

Adelson and his wife, Miriam, contributed $33 million to two super-political action committees in the last three weeks of the presidential election campaign in an unsuccessful effort to defeat Obama, Federal Election Commission filings show.

U.S. stocks rose today, after the longest weekly rally in the Standard & Poor’s 500 Index since August, as economic data in China beat estimates and investors watched the latest developments in American budget talks. The S&P 500 rose less than 0.1 percent to 1,418.55 at 4 p.m. New York time.

Read more at BLOOMBERG

{Matzav.com Newscenter}

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4 Responses to “Companies Seek to Beat Obama Tax Increases”

1. Comment from oy vai
Time December 10, 2012 at 8:21 PM

It’s just a matter of time, boys, and you will be paying your due.Enjoy it while it lasts.

2. Comment from Anonymous
Time December 10, 2012 at 10:14 PM

Matzav’s popularly posted photograph of Obama eating a hamburger must imply that our taxes are not going to starve the rich. Wow. Obama is on the money.

3. Comment from sol
Time December 10, 2012 at 11:07 PM

look unzer pres frest a hot dog

4. Comment from Anonymous
Time December 11, 2012 at 9:36 AM

So much for “trickle-down” economics. The wealthy hang on to their money without contributing to the economy. The average American, who needs to spend to meet their families’ expenses, doesn’t get the gelt. And the machinations are guided by clever lawyers that you and I can’t afford. If we want to recover our prosperity, we’ve got to get the balance right.

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