Potential Tax Hikes in 2011 are Affecting Business Decisions

Worries over whether Congress will extend some of the expiring Bush-era tax breaks are emerging as important factor in many investors’ and businesses’ decisions.
President Barack Obama has been proposing to allow taxes on dividends and capital gains to rise to 20% from the current 15% for households with incomes of more than $250,000. But many Dems are favoring to let it rise to as high as 39.6%
Stock prices of utilities recently have appeared to be factoring in the possibility of significantly higher dividend taxes next year.
Some companies are pumping up dividend payments this year to beat the possible 2011 tax increase, and their shares have rallied.
Small-business owners say unease about tax policy, along with the economy, has led them to hold off on hiring and investment.
A July analysis by Barclays Capital suggested that increasing taxes on investment income, as many Democrats advocate, could trim about 9% off the S&P 500 index.
While dividends are getting most of the attention, wealthy investors also are facing big incentives to realize capital gains by selling assets.

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