The annual Liberty Funds Tax Pain Index, which measures the taxes paid by U.S. investors on their mutual fund dividends and capital gains distributions, grew 9.5 percent from 1998 to 1999.
In 1999, investors paid a record $42.68 billion in taxes.
Liberty Funds, a subsidiary of Liberty Financial Companies of Boston, released its Tax Pain Index today. 1999 was the most recent year for which the tax information was available, according to the company.
In 1999, fund investors had combined fund dividends and capital gains distributions of a record $187.6 billion, according to Liberty. That represents a 610 percent increase over the 1990 Liberty Index baseline investor tax burden of $7 billion on $41 billion in dividend and capital gains distributions.
The full magnitude of the 2000 tax burden on investors will not be known for awhile. But, total capital gains distributions from funds climbed 45 percent from 1999 to 2000, Liberty said. Not only did mutual fund capital gains payouts significantly increase, but many investors saw their earned incomes escalate, pushing investors into a higher tax bracket, said Jim Blakeslee, senior vice president and chief tax strategist for Libertys Wealth Strategies Group.