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Kinder Morgan Management, LLC Message Board

  • seebelow561 seebelow561 Jul 9, 2012 5:10 PM Flag

    Future tax increases squeezing KMR up?

    I'm in KMR because I think their will be a lot of synergy. I see natural gas and domestic oil transportation and storage as safe bets and I think the long term capital gain tax break (and future capital gains being offset by carry-forward capital losses) are more solid than the lower tax rate on dividends.
    I sold my regular-dividend stocks when ObamaCare made it through the Supreme Court as I believe high dividend stocks are going to be under pressure the closer the loss of the dividend tax break comes to reality.
    If the dividend rate goes to 43% and LT capital gains and MLPs are still at say 20%:

    -a present 7% dividend that nets 5.95% after 15% tax will only net 3.99% after a 43% tax
    -a stock with a net 5.95% dividend is worth 49% more than a stock that nets 3.99% if you only consider the dividend
    -it appears to me that MLPs would trade at a significant premium to regular dividend stocks and KMP with its broader tax appeal in particular.

    Your thoughts?

    More synergy- The increases in the dividends should largely keep pace with inflation as well.

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    • Worry more about your investments and less about taxes. The game is play is that we are changing from a country that imports energy to one that will be exporting.

      Sentiment: Buy

    • I started this thread back in July. I read a mention from an analyst a couple days ago on google finance that KMR and EEQ could see a lot of demand as the expiration of the tax cuts and increases in the dividend rate become more real towards the end of the year.
      I think it's starting to happen. KMR is thinly traded and it doesn't take many $ to move it up. Look for it to close the gap with KMP and pass it up as a win for Obama looks more and more likely.

      Sentiment: Strong Buy

    • It is amazing what
      someone can do with
      numbers. Like leaving
      certain parts of a movie out. To get the
      outcome you want. Will
      have a new way to add
      numbers soon. VERY SOON

      (bullbuster77)

    • Has anyone figured out what the 10 days prior ex average KMR price is for the distribution? Or the per share equiv?

    • hahaha
      A lot of circular logic and reasoning that is too close to the forest to see the trees.
      Call it what you want but obviously taxes are going up on everyone who pays taxes of any significance. It may not be in the form of a higher tax rate (too obvious), but will be in the form of lost deductions and a higher % of income being taxable.
      We have a huge and growing deficit being compounded by fantastically expensive new social programs. It all could be magnified by a robin hood administration that is willing to carry those who dont pay taxes at the expense of those who do.
      And dont bother talking about offshore and all that. The truth is that the vast majority of taxes are collected from regular Americans who have a mortgage and 1.7 kids.
      Even if the Republicans gain control taxes still have to go up.
      So spare me all the wasted energy discussing lasered out specifics. Look at the big picture and quit wasting time arguing about details. Its all going in one direction regardless.
      KMR is a valuable tax tool because it allows it's investors to meter their dividend income and arguably provides that income in a tax state (LT capital gain) that may not see tax increases as quickly as some other forms of income.

    • "underfunding of Social Security"

      You do realize that the SS trust fund contains Treasury debt? That SS is dipping into the trust fund to pay current benefits? That this started in 2010 not 2020 like a projection many years ago?

      Now which European country has been borrowing money for a decade to pay pension benefits? Hm, maybe in 2020 the world will spike US interest rates up unless things are changed.

      "Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983"

      "Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers."

      From

      http://www.ssa.gov/oact/trsum/index.html

    • Question:
      If Democrats are 1/2 the country and they all want higher taxes, couldn't we just double the taxes of Democrats and leave everyone else alone? The math works.

    • Obama does not want taxes to remain low for those under $250K. He is just saying that to get re-elected. If he is re-elected, he will be sure to kill any deal that does not end all Bush tax cuts including for the middle class, and those under $250K. Whoever said that millionaires and billionaires are those making $250K? Obama, who has lied about everything. Why believe he wants taxes lower on middle class. Obama wants taxes higher on everybody. You will find out if he gets re-elected.

    • To say the economy will crash if the tax cuts are allowed to expire for all is misinformed. Who will feel the return to previous rates? Only the employed, and since THEY ARE EMPLOYED, they have the money to pay their taxes and further since the rates are progressive, those earning a low income will barely notice the increase. Also what about the "Payroll Taxes". Now in 2nd year of a reduced rate which causes increased underfunding of Social Security. Again, only the employed actually get the reduced rate and they aren't the ones that are hurting as badly.

    • "We need to go back to all the rates of 2000...for everybody. All of our National income must be included in getting more Federal income or it won't work to balance the budget."

      EVERBODY is actually correct. I'm a fiscal conservative, policy liberal and a mathematician. None of the plans from either party are sustainable. There is simply not enough income at the rich level to close the deficit. And way too much income at middle class level to not tax the middle class. No willingness from either party to cut spending. Both parties like to waste money on different things and we are at a fiscal situation that is unsustainable. I think there will eventually be a bond market collapse, but it will be a few years down the road. All of those predicting higher rates just don't understand how much bond buying power the Fed has: unlimited.

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KMR
104.71+3.81(+3.78%)Nov 26 4:05 PMEST