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NEW YORK (AP) — Coach on Tuesday said that it was moving the payment of its quarterly dividend to December from January, a step many companies are taking ahead of potential tax increases in 2013.
If the White House and Republican congressional leaders can't strike a deal on taxes and spending cuts, tax rates on dividend income will rise. That's prompted many companies to review their policies on payouts for shareholders, setting special one-time payments in December or moving up payments originally slated for 2013 to this year.
Coach, a New York-based seller of luxury handbags, shoes and other accessories, said Tuesday that it will now pay its quarterly dividend of 30 cents per share on Dec. 27. The payment date was previously scheduled for Jan. 2.
Since 2003 investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January without a budget deal in Washington. As it stands, dividends will be taxed as ordinary income in 2013, the same as wages, so rates will go up depending on a taxpayer's income bracket. For the highest earners, the rate would jump to 43.4 percent.