NU Online News Service, April 7, 2004, 1 p.m. EST – Few investors are taking advantage of a year-old tax law that provides generous breaks for investments, according to a new study by investment manager Eaton Vance Corp.[@@]
Few American investors are familiar with the Jobs & Growth Tax Relief Reconciliation Act of 2003 and even fewer have adjusted their investment programs to take advantage of its provisions, reports the fifth annual investor survey of Eaton Vance, in Boston.
The nationwide survey, conducted by Penn, Schoen & Berland Associates Inc., revealed that only 21% of investors are familiar with the 2003 Tax Act, and only 9% have made investment changes as a result of the act. Just 15% have discussed the implications of the act with their financial advisors.
Signed into law on May 28, 2003, the 2003 Tax Act reduced federal tax rates for individual taxpayers to a maximum of 35% (from 38.6%) for ordinary income and 15% (from 20%) for long-term capital gains.
Most significantly, the 2003 Tax Act reduced federal individual tax rates on qualified dividend income to a maximum of 15% from the previous high of 38.6%.
Only 20% of those surveyed could cite correctly the current maximum federal tax rate for ordinary income, and fewer than 40% could cite the maximum federal tax rate for long-term capital gains and qualified dividends.
Advisors can help clients greatly by talking to them about what the 2003 Tax Act means to them, suggests Eaton Vance.