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Family Dollar moves up dividend payment

MATTHEWS, N.C. (AP) -- Family Dollar Stores Inc. will pay is moving up the payment of its quarterly dividend in anticipation of an increase in federal tax rates in 2013.

The discount retailer said Tuesday that its 21-cent-per share dividend is payable Dec. 27 to shareholders of record as of Dec. 14. The dividend is typically paid in January but the company wanted to take advantage of current low tax rates.

Family Dollar is the latest of many companies to move up its quarterly payout or issue a special end-of-year payment to protect investors from potentially having to pay higher taxes on dividend income starting in January.

Since 2003 investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January unless Congress and President Barack Obama reach a compromise on taxes and government spending. As it stands, dividends will be taxed as ordinary income in 2013, the same as wages, so rates will go up depending on which income bracket a taxpayer is in. For the highest earners, the dividend rate would jump to 43.4 percent.

Family Dollar, based in Matthews, N.C., operates more than 7,500 stores across the country.