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Fiscal cliff may be behind Wal-Mart dividend move

Updated: November 19, 2012 9:50AM



BENTONVILLE, Ark. — Wal-Mart is changing the date that its fourth-quarter dividend will be paid, an action that the world’s biggest retailer may be taking to avoid a higher tax rate on the dividend if there’s no agreement on the fiscal cliff.

Simultaneous tax increases and government spending cuts, known collectively as the “fiscal cliff,” are set to take effect Jan. 1 unless Congress and President Barack Obama reach a deal first.

Obama wants to keep the tax cuts in place, including the 15 percent dividend rate, for people making less than $200,000. Republicans want to keep the tax cuts for everyone, including the 15 percent dividend rate, but have not taken a hard line on the dividend rate publicly.

Dividend payments were taxed like everyday income, meaning taxed by increasing brackets, until 2003, when Congress passed sweeping tax cuts backed by President George W. Bush.

The 2003 cuts reduced the tax on most dividends to 15 percent.

If Obama and Congress can’t come to an agreement, and perhaps even if they can, dividends will be taxed like everyday income again. And the top marginal income tax rate will climb back to 39.6 percent from 35 percent, where it has stood since 2003.

The country’s top earners will be taxed an additional 3.8 percent on dividends to pay for the president’s health care overhaul, meaning the wealthy will pay 43.4 percent on dividends — almost triple the tax they pay today.

Wal-Mart Stores Inc. said Monday that the quarterly dividend of 39.75 cents per share will now be paid on Dec. 27 instead of on Jan. 2, 2013. The dividend will still be paid to shareholders of record on Dec. 7.

Wal-Mart has 10,500 stores in 27 countries.



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