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HCA Holdings plans special year-end cash dividend

NASHVILLE, Tenn. (AP) -- HCA Holdings will pay shareholders a $2 cash dividend by the end of the year, as the largest U.S. hospital chain became the latest company to announce a special payout that sidesteps the possibility of higher taxes on dividend income starting next year.

The Nashville, Tenn., company said Monday it will use proceeds from a $1 billion offering of senior notes to pay for the special dividend.

Many companies are making special, end-of-year dividend payments or moving up their quarterly payouts because investors will have to pay higher taxes on dividend income starting in 2013, unless Congress and President Barack Obama reach a compromise on taxes and government spending.

Investors have paid a maximum 15 percent on dividends since 2003. But that historically low rate is set to expire in January. 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.

Even if a political compromise is reached, there's no guarantee that the tax rate for dividends will remain at its current level.

HCA said terms for the notes it plans to offer will depend on market conditions when they are priced.

Shares of HCA Holdings Inc. climbed 3.6 percent, or $1.15, to $32.90 Monday in premarket trading.