In these days of market uncertainty, one might consider investing in dividend-paying stocks as a way to make some safe gains. But that could all change soon if Congress doesn’t act to stop a coming hike in dividend income taxes.

Jeff Saut, chief investment strategist at Raymond James, told FOX Business Thursday that if lawmakers don’t work to prevent it, dividend taxes could go as high as 40%.

“There is a lot of uncertainty right here… in the President's bill, he talked about raising the tax on dividends from 15% to 20% on people making more than $250,000 a year as a couple, however, the thing that came out of the Senate didn't really address that,” said Saut.

If Congress doesn’t put a cap on that you could see it revert from 15% to as high as 40%, which is not good for dividend investors, he added.

Combined with the coming 3.8% surcharge on investment income to pay for health-care reform, which begins in 2013, one can’t help but wonder if these taxes are impacting the markets.

Indeed, Saut said Wall Street’s concerns and uncertainty over these taxes are already affecting the markets, as they are a major reason, he believes, for the market correction since the April 26 highs.

 

You Make It. They Take It.