Investing April 11, 2001

Tax Pain Index Rises

April 11, 2001 (PLANSPONSOR.com) - While qualified plan investments may be shielded, the tax "pain" of mutual fund ownership rose 9.5% last year, according to a new report.
Reported by

That was the result of Liberty Funds Distributor?s fifth annual mutual fund Tax Pain Index, which measures taxes paid on dividends and capital gains distributions. The index increased by 9.5% between 1999 and the previous year, the latest data shows.

During 1999 investors paid $42.68 billion in taxes on $187.6 billion in taxable mutual fund distributions, up 610% from the $7 billion investors paid in such taxes in the 1990 base year.

Total capital gains distributions grew 45% from 1999 to 2000, according to research by the Investment Company Institute, while Thomson Financial reports that 2,311 mutual funds lost money in 2000, yet still made capital gains distributions.

In calculating taxable distributions, Liberty estimated the tax burden faced by mutual fund investors based on statistics from the Investment Company Institute, Morningstar and Strategic Insight.

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