WASHINGTON - Did you see the story about Costco borrowing $3.5 billion to pay a special $7 a share dividend to its stockholders before year's end to avoid being hit by President Obama's higher tax on investors?
What makes this story especially juicy is that it reveals how Obama's fat cat supporters, who bankrolled his bid for a second term and embraced his proposed tax increases, have taken steps to shield themselves from the president's "tax the rich" fiscal folly.
The tax avoidance maneuver, which Forbes magazine calls "a six-year advance on the company's current annual dividend of $1.10 per share", will be a windfall for Costco's richest investors if the tax on their dividends is raised, as Obama has sought to do over the past four years.
One of the people who will benefit from this deal will be Costco's co-founder and former CEO Jim Sinegal who owns more than two million shares of its stock and will collect about $14.4 million from the special dividend. Had he taken that next year, he could be slapped with a tax rate of 43.4 percent if Obama's proposed tax increases become law (boosting the tax rate on dividends to over 20 percent and adding a surcharge tax on millionaires).
Instead, Costco decided to pay its stockholders before Dec. 18 so that the special payoff plus a regular quarterly cash dividend of 27.5 cents will be taxed at the current 15 percent rate under the investment tax cuts wisely enacted under President George W. Bush in 2003.
This means Sinegal, who gave a prime-time speech in behalf of Obama's re-election at this summer's Democratic national convention, would avoid paying about $4 million in higher taxes next year.
Costco is not alone in its early tax-avoidance payouts. Many American businesses, from Wynn Resorts to Tyson Foods, have also declared special dividends to avoid the higher tax rate if the Bush rates expire.
One of the most notable Fortune 500 companies to join the pack is the Washington Post who endorsed Obama for a second term and has warmly embraced his tax increase plans. The media conglomerate has announced it will pay its 2013 dividends "before the end of this year to try to spare investors from anticipated tax increases," reports the Associated Press.
Among those who stand to benefit from the Post's beat-the-tax-deadline -- and pocket a bundle of money -- will be stock tycoon Warren Buffet and his Berkshire Hathaway firm, the newspaper's biggest shareholder.
BREAKING: Senate Judiciary Committee Approves Gang of Eight Immigration Reform Bill | Daniel Doherty
Whoa: US Hasn't Detained Five Benghazi Terrorists Due to Trial-Related Evidentiary Concerns | Guy Benson
Baucus & Hatch Grill IRS Commissioners Who Don't Know Anything: "That's A Lie By Omission" | Greg Hengler