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A note on foreign taxes on dividends (Dec 16, 2011)

Some investors dislike foreign stocks (ADR) because foreign taxes widthdrow. I think that for well diversified dividend investor this concern is not rellevant for taxable (non-IRA) account.

US qualified tax rate now (I wish in future) is 15% for most folks with regular (non-IRA) accounts. Any smart investor must diversify. Let say 1st investor holds 4 US companies and 1 foreign with "terrible" 31% tax and each pays 100$ dividends. Let's say 2nd investor holds 5 USA companies each pays 100$ dividends. Both investors suppose to pay 75$ taxes. The 2nd investor takes 15$ from each company dividends and 1st investor takes 31$ from non-US company dividends and 11$ from each US company dividends. SO FOREIGN TAXES ARE IRRELEVANT IF STOCKS ARE IN TAXABLE ACCOUNT.