For investors who are increasingly concerned that President Joe Biden will act to increase levies on investment gains, UKTN’s Jim Cramer on Tuesday proposed a strategy to avoid potentially higher taxes for the wealthy.
“If you’re worried about Biden’s plan to raise taxes on capital gains but not dividend income, that’s no reason to sell everything,” said the host of ‘Mad Money’. “It’s a reason to buy dividend-paying stocks.”
Biden could introduce the change, which would end the tax-advantaged capital gains status for millionaires, as early as this week. As stated, the proposal includes a tax increase from 20% to 39.6%. The rate could reach 43.4% for the richest taxpayers.
“If the capital gains rate goes up to 39.6% and the dividend rate stays the same at 20%, that instantly makes dividend-paying stocks much more attractive,” Cramer said.
“Biden’s plan would create a world where every dollar of dividend income is worth $ 1.32 in capital gains,” he added. “As long as many wealthy investors are concerned about this tax hike, expect investors who want to pay less tax to start trading for dividend-paying stocks.”
Cramer has endorsed the following 10 high yielding stocks with “Best Stories”:
Disclosure: Cramer’s Charitable Trust owns shares of Crown Castle.
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