Chart Of The Day: Spot The "Avoid The Dividend Tax Hike" Scramble

Tyler Durden's picture

No commentary necessary, although we will add one word: "unsustainable." We will also add that apparently not one economist could factor the simplest human behavioral response: "hey, lets pay ourselves dividends today to avoid the dividend tax hike tomorrow" into their models, which is why reality smashed the "estimate" by about 6 standard deviations. Ah, economists.

Source: St. Louis Fed

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GetZeeGold's picture



Who could have seen it coming really?

Dr. Richard Head's picture

Mmmmmm.....I love the smell of "unintended" consequences.  Just like how Obamacare is now being shown to not cover a significant section of the "poor".  Rules for thee (all your serfs) and not for me (corporate subsidized swindlers).

Chuck Walla's picture

No unintended consequences in Obamacare. Kill the poor, weak, elderly. How else is this monster sustainable before total control is achieved?



LeisureSmith's picture

OT, but can anyone tell me what happened here just after 10a.

Software glitch, fat finger etc.?

mayhem_korner's picture



I'd love to help but I don't speak 'bot.

CPL's picture

HFT stuffing.


Means the British market is just as crooked as the US.  Also means all your 'money' is now nothing but risk tied up in a controlled market.  Good luck, but if you are in a postion to take a profit, do so and stay out of it completely.

Theosebes Goodfellow's picture

Hmmm..., glitch in the matrix. Which color pill did you say you swallowed?

LeisureSmith's picture

I don't recall.

Hey, i should be in politics!

wombats's picture

"Money for nothin and the chicks for free!"

mayhem_korner's picture



Well, if you plug the Q4 dividend into the dividend-growth model for stock valuation...voila!  Tom Lee lowballed the Dow at 20K.  /s

SheepDog-One's picture

Uh oh, what's wrong with equities futures? What are they saying $85 billion/month new raw fuel is Just. Not. Enough.? 

Well I'm sure all the Eclownomists got it all figured out already.

W74's picture

I would like to see Dividends taxed at half the rate of Cap Gains.  This would incentivise boards and shareholders as well as execs to actually pay out dividends....which used to be the whole fucking point behind investing in companies in the first place.

Couple the above with a transaction tax of any amount and you'd see beaucoup amounts of market stability.  Why?  Day traders would go away and so would the Algos and HFTs.  The people in the market for dividends who like to sit and wait and invest in companies that are perceived to be doing well will prosper best.  The speculators will still be in the game, but at least they'll be taxed and if you tax this stupidity beyond what is sensible amounts of risk it'll go away.

But don't anybody hold their breath.

LawsofPhysics's picture

What?!?!  Are you suggesting that markets were actually supposed to be a mechanism for true price discovery in order to spur new innovation and value-added companies and not an easy mechanism for skimming/stealing the wealth of the productive few by paper-pushing fucknuts?

Isn't fascism great?  Bad ideas and bad companies are simply no longer being allowed to die.  Shit, they are taking over.

youngman's picture

You will NEVER donate enough money to politicans to get that passed...

SheepDog-One's picture

Thats right...the ONLY important thing now is 'special people' and making sure no matter what they survive and receive all the profits.

CheapBastard's picture

true, i stopped investing in most companies last year when the CEOs were handing themselves giant bonuses and yet not paying out div.....why should i invest with the selfish greedy ?

derek_vineyard's picture

dividends used to be ordinary income.  why not make the interest on coporate debt and treasuries to be taxed at the capital gains rate.....that will add fuel and an investor subsidy to the Fed.  keep the market high and keep rates low.......its like a coiled spring......compressing tighter and far can it compress??????  i have have no idea, a spring has never been coiled that tight.   i'm assuming the fed thinks the coil is fail-safe....or just doesn't care if it goes boom.

andyupnorth's picture

What are the unintended consequences?

Fewer companies offering dividends? Or dividend pay-outs decreasing?

People getting out of dividend-paying stocks and into something else?

Stock market going lower due to high-volume exiting?

orangedrinkandchips's picture



Not 'free-cash-flow'...not cash on fucking way....DEBT, DEBT AND MORE DEBT...TO PAY MYSELF!!!! Not personal debt, but shareholder debt!


That is unsustainable!

LawsofPhysics's picture

Don't worry, when the default on the loans, the taxpayer will bail them out (by force) and these corporate heads will keep their private islands, security teams, and all their stolen physical assets.  Oh wait...

orangedrinkandchips's picture

I cannot disagree....ignorance is truly blissful.....i swear!

Cognitive Dissonance's picture


<Most certainly not the supreme eCONomist priests of the false fiat cult.>

CheapBastard's picture

Economics is a science, right? Well, being what it may, I do notice your graph resembles luxury yacht sales for 2012.

Stuck on Zero's picture

Economics is actually a Social Science.  But more and more it's looking like a "Socialist Science."


Lord Of Finance's picture

. . . its been turned into a mad science. The social order is being destroyed, so they have also turned uncreative destruction into a science.

Shevva's picture

I saw this episode, Homer didn't make the jump. He hit his head all the way down.

Donlast's picture

Never understand why they can never see that the impact of increasing taxes is asymmetric compared with cutting spending. 

Make cuts and it is pretty straightforward what are the implications.  There may be some "unintended consequences" but not often and usually quickly obvious.  

But raising taxes is an entirely different ball game.  One has absolutely no idea what the eventual consequences may be.

So for CBO to actually make ten year forecasts of the payback in revenue from hiking taxes on the "rich" is a fit exercise for someone in a lunatic asylum who has a slender grasp of reality, but a CBO economist....?

donsluck's picture

I disagree with your "absolutely no idea" thesis. There are rich and powerful people who have teams analyzing and front running all political changes. They will profit. Unfortunatly, for the economy at large, a stable and slow-moving political environment is best because most businesses do not have the spare resources to devote to political analysis.

Sudden Debt's picture

What AMAZES ME bigtime is that there are so many DIVIDEND STOCK THAT GIVE DIV'S LARGER THAN THEIR EPS!!!


Sure... divs of 16% are totally normal...


I did recommend these above to my boss :) which I hate :)


Umh's picture

Between the tax laws concerning reits and the leverage they use it can be very confusing. Guessing when an interest rate change is going to occur is a large part of buying most reits.

100pcDredge's picture

I give up.. where is it?

Michelle's picture

Let's see, the cycle repeats, big capital gain distributions and a recession follows shortly thereafter.