Feeling the Tax Sting


Mutual fund investors were hit hard in 2006, paying the IRS more than $23.8 billion on their reinvested distributions. Equity fund shareholders paid more than 60% ($14.4 billion) of the total tax burden on their capital gains.

Investment companies distributed $418.5 billion last year, surpassing the previous record high of $376.6 billion set in 2000. Short- and long-term distributions from equity funds increased 79% and 86%, respectively, from 2005 levels. Over the last 10 years, investors paid on average 17% to 44% of their load-adjusted returns in taxes.

Source: Lipper’s Taxes in the Mutual Fund Industry—2007, www.lipperweb.com.

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