* Dividend planned for January shifted to late December
* Wal-Mart shares end about 1.5 percent higher
* Dividend taxes will rise without congressional action
By Jessica Wohl
Nov 19 Wal-Mart Stores Inc on Monday
became the biggest corporation yet to move its planned dividend
into late December from early January to help shareholders avoid
a looming jump in the tax rate due to the so-called fiscal
The shift by the world's largest retailer will give
shareholders, including the family of founder Sam Walton,
roughly $1.34 billion in total dividend payments taxed at the
Fiscal years for retailers typically end in late January, so
their dividend payments often are timed differently from those
of other types of companies. Exxon Mobil Corp, for
instance, had already planned for payouts in December.
"There are complex fiscal and federal tax rate issues that
may not be resolved in the next few weeks, despite the ongoing
good faith negotiations between the administration and Congress
to resolve details related to the fiscal cliff," Wal-Mart said
in a statement.
"In light of this uncertainty, the board determined that
moving our dividend payment up by a few days to 2012 was in the
best interests of our shareholders."
Teen apparel chains Hot Topic Inc and The Buckle
Inc already said they would move dividends typically
paid in January into December to allow shareholders to benefit
from the lower tax rate set to expire this year.
Adding to what has become a clamor for the White House and
legislators on Capitol Hill to compromise, the Fitch ratings
agency said on Monday that the "fiscal cliff" could trigger a
recession and push the unemployment rate above 10 percent.
Fitch said it did not expect the tax hikes and spending cuts
to occur. The investment firm Morgan Stanley Smith Barney also
said in a market commentary on Monday that it thought Washington
would "act to mitigate and delay" the cliff.
Robert Greifeld, chief executive of NASDAQ, the
second-largest stock exchange, called on Democrats and
Republicans to rediscover the ability to compromise and commit
to a long-term plan to reduce the national debt.
Republicans must budge on tax increases and Democrats must
give ground on spending cuts, Greifeld said in a Monday speech
at the Brookings Institution, a Washington
SPOTLIGHT ON DIVIDEND TAXES
Without action from Congress, the dividend tax rate will
rise to the ordinary income tax rates, as high as 39.6 percent
for top earners. Dividends are now taxed at 15 percent for the
top four brackets and zero at the bottom.
In 2003, President George W. Bush and Congress cut taxes on
capital gains and dividends, which mostly affect high-income
taxpayers. These cuts are set to expire at the end of 2012.
President Barack Obama proposed raising dividend taxes back
to ordinary income tax rates in his most recent budget, but many
Washington insiders believe Democrats will settle on a rate of
20 percent if a deal is struck.
The Democratic-led Senate passed a bill this year extending
the disputed Bush-era tax rates for the middle class and letting
rates for the wealthiest taxpayers go up.
But within that legislation, Senate Democrats proposed a 20
percent dividend tax rate - not Obama's preferred higher
rate. Add in the new investment tax from Obama's health care
law, and dividend taxes would rise to 23.8 percent.
Dividend-paying companies including Altria Group Inc,
AT&T Inc and Verizon Communications Inc are among
those pressing lawmakers to avoid a tax hike, with executives
and surrogates making frequent visits to Capitol Hill.
The family of Wal-Mart founder Sam Walton owns roughly half
the company's shares and probably would pay much higher taxes on
dividends paid after Dec. 31 unless Congress takes action.
Two of Sam Walton's sons, Rob Walton and Jim Walton, are
board members, and Chairman Rob Walton's son-in-law, Gregory
Penner, is also on the board. The Waltons and Penner recused
themselves from the board discussion and vote on the dividend
date change, Wal-Mart said.
Rob Walton and Jim Walton are the 9th and 7th richest
Americans, respectively, according to Forbes. Two other members
of the Walton family are also listed in the top 10.
Wal-Mart's board approved changing the payment date of the
quarterly dividend of 39.75 cents per share to Dec. 27 from Jan.
2. The record date associated with the payout remains Dec. 7.
Shares of Wal-Mart rose almost 1.5 percent to close at
$69.02 on the New York Stock Exchange.