For investors concerned that President Joe Biden will raise taxes on investment profits, The Washington City Times’s Jim Cramer on Tuesday offered a strategy to avoid the potentially higher tax on the rich.
“If you’re concerned about Biden’s plan to tax capital gains but not dividend income, that’s no reason to sell everything,” said the Mad Money host. “It is a reason to buy dividend shares.”
Biden could pitch the change this week, which would end the tax-favored status of capital gains for millionaires. As mentioned, the proposal includes an increase in the tax from 20% to 39.6%. The rate could reach 43.4% for the richest taxpayers.
“If the capital gain percentage goes up to 39.6% and the dividend percentage stays the same at 20%, that immediately makes dividend stocks a lot more attractive,” said Cramer.
“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 increase, you should expect investors who want to pay lower taxes to switch to dividend stocks.”
Cramer endorsed the following 10 high-yield stocks with the “best stories”:
Disclosure: Cramer’s charity owns shares of Crown Castle.
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