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Rumor: Apple to issue special year-end dividend?

updated 01:25 am EST, Thu November 29, 2012

Could boost stock price and avoid cap-gains increases

Based on the moves by several other companies including Costco -- or perhaps a bit of wishful thinking by shareholders -- Apple may be contemplating a special one-off dividend to help avoid any potential investor unrest in light of likely increases in the capital gains tax rate. Further reducing the company's enormous cash pile, which is growing faster than Apple can spend it on dividends or stock buybacks, might accomplish a hat trick of saving shareholders money, reducing its own tax liabilities and boosting its own share price.

Walmart and Costco are among the companies that have recently announced a special dividend to try and head off possible dividend taxes. Tyson Foods, Wynn Resorts, Dillard's and at least 63 other publicly-traded companies have also announced year-end dividend distributions, fearing increased costs due to the possible expiration of the Bush-era tax cuts on high-earning individuals and companies with cash stockpiles in the upcoming Congress.

If Congress doesn't agree on a compromise extension of some elements of the legislation, the 10-year Bush tax cuts that mostly went to wealthy investors and highly-profitable companies will expire -- with consequences both for business, the rich and middle-class taxpayers. The President is seen by the business community as having won a second term on the promise to keep the tax cuts for the middle class, but allow rates on capital gains and high-earner (over $250,000 per year) to return to the pre-Bush rates. Even if a deal is reached to keep portions of the Bush cuts, the wealth-holders of the US can expect to see some level of marginally higher tax increases in the top two brackets (for those earning at least $250,000 per year or higher) and a significant jump in capital-gains taxes (from the current lowest-ever rate of 15 percent to the pre-Bush rate of 23.8 percent).

So far, the threat of the expiration and some "poison pill" cuts that will triggered by it appears to have worked to focus the Congress on finding a compromise: both the President and Speaker of the House John Boehner were quoted today as saying they expected to work out a deal to avoid the consequences -- most of which have been largely overblown, particularly by business-oriented media outlets.

The possibility of a jump in capital-gains rates (still well below the typical rates of cap gains and individual taxes during most of the 20th century, but the first increase in 20 years) has investors and businesses studying whether the moment represents an opportunity to disperse and re-invest some of the massive gains in profits most corporations have garnered. Apple, not known for reacting to pressure from speculators and investors, has not thus far indicated any interest in offering a special dividend.

by MacNN Staff



  1. l008com

    Addicted to MacNN

    Joined: 01-10-00

    Ooooh that would be a nice christmas bonus for us true believers that bought apple stock in 2000 & 2001

  1. Inkling

    Senior User

    Joined: 07-25-06

    When Obama took office with the Democrats in control of both houses of Congress, our federal debt, built up over 230 years, was $10 trillion. In just four years, it has grown 60 per cent to $16 trillion. In the next four years it is predicted to double to $20 trillion dollars. And that's coming at the very time when we need to be coming up with a way to cope with the baby boom retirement as Social Security income slips into the red for the first time in its roughly eighty years existence.

    So what are these Blue State Liberals at major west coast corporations doing? They're scrambling to issue early dividends so they and their kind won't get stuck with the higher taxes, taxes that won't even begin to cover our trillion dollar deficits. And whether they issue their dividends early or not, Apple is probably the worst of the lot, keeping tens of billions of dollars offshore, so they don't pay our corporate taxes. Hey, if more taxes are good, pay them. Don't just demand that someone else pay them.

    And, if these coastal liberals managed to avoid those taxes, who will get stuck with those higher taxes that the Democrats want to dump on us? It'll be small, single proprietor businesses who run all their expenses through their own income. Faced with losing money, they'll have to lay off workers in our dreadful economy. Those hard-working people, who lack the ability the rich with investments have to hide their money from taxes, are the real people who'll be screwed by these $250,000/year means you're rich tax increase.

    And get ready for a very long and deep recession. Those small businesses are what grows our economy. Stomp on them, as Obama and the Democrats want to do with both taxes and the costs of mandates health insurance, and we'll be hurting for a long time.

  1. Flying Meat

    Dedicated MacNNer

    Joined: 01-25-07

    That has the ring of truthiness to it. But I think you overlook the obvious. Historical evidence. Taxes don't hurt the economy as much as is asserted. In fact, our nation's most prosperous cycles appear to coincide with higher tax rate cycles.

    And the ballooning deficit is an indirect result of the the lowest income tax rates most of us have seen in our lifetimes, combined with the inability of the higher income brackets to actually create U.S. jobs in a meaningful way. Throw in a couple of wars, and you've got a balloon. Maybe you can throw in some arguably light recession rescue spending, and there you are.

    The threat handily thrown about is that the job creators will flee/fail. That $250.000.00 makes you rich, is a bit of a stretch, yet few can argue that most of the population of the U.S. earns well below that amount. 250K might better be considered "you can afford to pay a little more", than "makes you rich."

    Some folk don't realize that the amount they (as a 250K earner) will owe more taxes on is the money's earned "above" the first 250K.

    In short, well considered, yet still inflammatory rhetoric is still not really helpful in such discussions.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    My thanks to Flying Meat for saying a lot of what I was going to say.

    Inkling, again I have to question your "news" sources. In particular, here are two areas where you are just flat-out wrong.

    1. The debt. You claim that it has gone from $10T to $16T in four years, but according to PolitiFact you are incorrect: it is $11T (actually, $10.95T) as of May 2012.

    (the deficit has actually gone DOWN in recent years, by the way)

    2. As pointed out by FM, your taxes don't go up if you make $250,000 -- the rate of tax on the money you make beyond that goes up (very, very modestly I might add, still well below historical average tax rates). At the absolute worst -- and assuming Congress simply does nothing -- I think we could fairly say that the upper-middle-class and "rich" will get a light misting rather than a "soaking." Of course, nobody yet knows for sure what deal will emerge on the so-called (and blown out of proportion) "fiscal cliff" talks.

    PS. Maybe you're doing very well these days, but for most regular workers and business owners, $250K in income per year cleared after the numerous small-biz deductions would indeed be considered "wealthy," or at least "financially secure." It doesn't meet my definition of "rich" but it would definitely meet my criteria for being financially well-off, particularly these days.

    Again, I suggest you diversify your news sources. You appear to be getting lots of bad info from your present ones.

  1. Mebsat

    Fresh-Faced Recruit

    Joined: 10-31-07

    In particular, here are two areas where you are just flat-out wrong.
    1. The debt. You claim that it has gone from $10T to $16T in four years, but according to PolitiFact you are incorrect: it is $11T (actually, $10.95T) as of May 2012.

    It's obvious you are ignorant of the difference between the publicly held component of the debt and the total debt. Inkling is referring to the total debt, and your source is only referring to the publicly held debt. Of note, you can look at the table you cite to see that the publicly held debt has gone up under Obama by 71% (using 2009 as Obama's base year). Was that the point you were trying to make?

    (the deficit has actually gone DOWN in recent years, by the way)

    Again, see your own source. Look at 2008 to see what a bad deficit used to look like. That was $458 billion, and now it is $1,333 billion (That's the same as $1.33 trillion, btw)

    2. As pointed out by FM, your taxes don't go up if you make $250,000 -- the rate of tax on the money you make beyond that goes up (very, very modestly I might add, still well below historical average tax rates).

    You are right about marginal tax rates in that many Americans do not understand how they work. Indeed the increases don't really seem like much.

    The bigger problem is that most Americans don't understand how businesses are taxed either. Many small businesses in the US report their income on personal returns (S-Corporations and LLCs) and those "personal" rates basically equal less money to reinvest in the business, including in new hires and equipment.

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