Americans see biggest monthly income drop in 20 years

Americans see biggest monthly income drop in 20 years

Feeling poorer?

Americans saw their income drop so dramatically in January that it marked the deepest one-month decline in 20 years.

Personal income decreased by $505.5 billion in January, or 3.6%, compared to December (on a seasonally adjusted and annualized basis). That’s the most dramatic decline since January 1993, according to the Commerce Department.

It’s something of a combination of one-time events, though.

Monthly income was unusually high in December because companies paid out early dividends to avoid upcoming tax hikes. Companies like Wal-Mart (WMT, Fortune 500), Oracle (ORCL, Fortune 500), and Costco Wholesale Corp paid special dividends to their shareholders at the end of 2012, instead of waiting until 2013.

In doing so, they helped their high-income shareholders (individuals earning at least $400,000 a year, or married couples earning $450,000) avoid paying higher taxes on their gains. In their last-minute fiscal cliff deal, lawmakers decided to raise dividend tax rates for high-income households from 15% to 20%.

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