Wal-Mart Stores Inc. moved its planned dividend into late December from early January as it tries to help its investors avoid a looming jump in the tax rate on shareholder payouts that is part of the so-called fiscal cliff.
“There are complex fiscal and federal tax rate issues that may not be resolved in the next few weeks, despite the ongoing good faith negotiations between the administration and Congress to resolve details related to the fiscal cliff,” Wal-Mart said in a statement.
“In light of this uncertainty, the board determined that moving our dividend payment up by a few days to 2012 was in the best interests of our shareholders.”
The family of Wal-Mart founder Sam Walton owns roughly half of the shares in the world’s largest retailer and probably would be among those forced to pay much higher taxes on dividends paid after Dec. 31 unless Congress takes action.
Two of Sam Walton’s sons, Rob Walton and Jim Walton, are board members, and Chairman Rob Walton’s son-in-law, Gregory Penner, is also on the board. The Waltons and Penner recused themselves from the board discussion and vote on the dividend date change, Wal-Mart said.
Wal-Mart is among the companies in the spotlight in conversations about the fiscal cliff. Chief Executive Mike Duke was among the business leaders who met with President Barack Obama on Nov. 14.
“We encourage the White House and Congress to work together on an approach that includes additional revenue, comprehensive tax reform, and spending cuts, including entitlement reforms, to get our fiscal house in order while creating economic growth,” Mr. Duke said in a statement released by the company after the meeting last week.
In 2003, President George W. Bush and Congress cut taxes on capital gains and dividends, which mostly affect high-income taxpayers. These cuts are set to expire at the end of 2012.
Without action from Congress, the dividend tax rate will rise to the ordinary income tax rates, or as high as 39.6 percent for top earners. Dividends are now taxed at 15 percent for the top four brackets and zero at the bottom.
Wal-Mart’s board approved changing the payment date of the quarterly dividend of 39.75 cents per share to Dec. 27 from Jan. 2. The record date associated with the payout remains Dec. 7.