NEW YORK (AP) — If Washington allows tax cuts to expire at the end of the year, taxes on dividends will nearly triple for the highest-paid Americans. That's led some experts to warn of a looming collapse for popular dividend-paying stocks. When Uncle Sam charges a higher tax on something, they reason, it drives people away.
But judging by the country's previous experience taxing dividends, that may not be how things play out.
"Historically, big changes in taxes just have no effect on dividend stocks," says James Morrow, a fund manager at Fidelity Investments. "And our view is that you should lean on history."
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