This down draft seems to be irrational because if people are afraid of the elimination of the Qualified Dividends preferential tax rate, it has nothing to do with REITs. They must be lumping REITs in with corporate dividends that qualify. Neither congress nor the President will raise the current tax rates. That is political suicide and very detrimental to the economy. They will eliminate tax loop holes to recover tax income. They will play their normal game of brinkmanship as they did last year but in the end, they will come to an agreement even if it's to kick the can down the road once again. How the overall market reacts depends on the quality of the fix for the economy and the debt.
i think this time there is some real mojo behind increasing taxes in some way. the fear is qualidied tax breaks like capital gains and others will go away. there is some reasonable analysis that indicates the gov-deal may increase that to 20% instead of full-on tax liability. however, a lot of this now is fear-selling around how all divs will be taxed at 30%+ depending on bracket. as well as changing loopholes, fiscal cliffs, year-end window dressing, tax-loss-taking, institutional rebalancing, etc....
all seems to have started early.
kind of like - black friday isn't friday anymore, its pre-thanksgiving.
welcome to post-traditional america, in real-real time.
No one really knows what tax loop holes are going to be eliminated. Does this mean REITs are going to have to start paying corporate taxes like C Corps do? If so, I can understand why people are dumping them.