Billionaires’ Big Bonuses Ahead Of The Fiscal Cliff
As Congress stumbles toward the automatic tax increases and spending cuts that will be triggered on New Year’s Day, a record number of American companies have declared special dividends in an effort to get cash to corporate insiders at this year’s relatively attractive tax rates. Thanks to the impending fiscal cliff, severalForbes 400 members, including Oracle’s Larry Ellison, Carnival’s Micky Arison and several Campbell’s Soup heirs, will be taking home extraordinarily large bonuses this holiday season. The biggest beneficiary of a timely distribution will be casino king Sheldon Adelson, famed anti-Obama backer of Mitt Romney, who is scheduled to pocket more than $1 billion after federal taxes.
Qualified dividends are currently taxed at the same rate as capital gains, which means an individual who enjoys significant dividend income is, at most, handing over 15% of her checks to the federal government. Whether our hapless bureaucrats in Washington manage to avoid the “fiscal cliff” or not, it is clear that tax rates will be going up across the board in 2013, as both parties have openly declared that they need an even larger chunk of the real economy. The tax rate on dividend income is predicted to jump to as high as 43.4% in 2013, as the Jobs and Growth Tax Relief Reconciliation Act of 2003 expires, returning the top rate to 39.6%, and the 3.8% ObamaCare tax takes effect. No surprise then that since the November elections, over 130 publicly listed firms have announced onetime payouts to shareholders.
Here is a look at 10 wealthy titans who will pocket a combined total of $1.55 billion in the next three weeks, $517 million more than their take would be in 2013 if the change in tax law goes into effect.
Sheldon Adelson, Las Vegas Sands
On December 18th Adelson will reap a $2.75 per share special dividend from his Las Vegas Sands Corp., which will bring the Las Vegas overlord more than $1 billion after federal taxes. If taxed at 43.4% rather than today’s 15%, the cash pile would come to $671.4 million.
Mary Alice Dorrance Malone, Bennett Dorrance and Charlotte Colket Weber, Campbell’s Soup
Together, the heirs, who control over 113 million shares of the canned soup seller, will receive 58 cents per share on December 28th. The trio will make $55.9 million after federal taxes, $18.7 million more than they would if the dividends were paid out in 2013 and taxed at next year’s projected top rate.
James Chao, Dorothy C. Jenkins and Albert Chao, Westlake Chemical
The children of Westlake Chemical Corporation founder T. T. Chao, James Chao, Dorothy C. Jenkins and Albert Chao, control 70% of the plastic producer’s public float. Valued at Thursday’s close of $72.52, their nearly 46.8 million Westlake shares are worth $3.4 billion. Thanks to a special dividend of $3.75 to be paid on December 12th, the billionaire family will be getting even richer ahead of the fiscal cliff. The Chao family’s distribution will total $149.1 million after the 15% dividend tax rate is applied, as opposed to the $99.3 million that would be left were the cash doled out in 2013.
Micky Arison, Carnival
Carnival, where Arison serves as chairman and CEO, announced a special dividend of 50 cents on November 16th. The payout will net Carnival’s captain $47 million at current rates, $15.7 million more than if the bounty was taxed at 43.4% in 2013.
Thomas Frist Jr., HCA
Frist’s HCA Holdings recently proposed a $1 billion debt offering that will fund a $2 per share special dividend, to be paid on or before December 31st. Frist will personally receive a $119 million windfall, $40 million more than if the company waited until January.
Larry Ellison, Oracle
Though Ellison’s Oracle Corporation has not announced a special dividend, the company is accelerating its cash distributions scheduled for 2013. As such, Oracle shareholders will receive their upcoming second, third and fourth quarter dividends on December 21st rather than next year. For Ellison, who holds more than 1.1 billion shares of the software company he founded, the 18 cent per share payout will bring him $168.1 million after federal taxes, saving the billionaire $56.5 million.