WASHINGTON — With the outcome of next month’s presidential election increasingly hazy, here’s a shred of clarity that investors can cling to: The tax rates they pay on investment income like stock profits and dividends are almost certain to change.

Whether rates rise or fall could affect the prices of some dividend-paying stocks, experts say. Some, mainly Republicans, believe that lower rates would boost the economy and lift markets.

Under the current system, people pay the government 15 percent on most dividends and capital gains, the profits from selling investments. Both candidates’ proposals would divide taxpayers into two categories: Those who earn more than $200,000 per year — $250,000 for families filing joint tax returns — and those who earn less.

President Barack Obama would boost the rate on capital gains to 20 percent for higher earners and leave it at 15 percent for everyone else. Mitt Romney wants to maintain the 15 percent rate for wealthier people and eliminate the tax entirely for everyone else.

The differences are more dramatic when it comes to dividends. Obama would tax high earners’ dividends as ordinary income, up to 39.6 percent for the wealthiest Americans. As with capital gains, Romney would maintain the 15 percent rate for richer people and eliminate the tax for people who make less.

The proposals reflect philosophical differences between the parties. Republicans think lower rates will encourage more people to invest, juicing the listless economy.

“It would encourage you to take more risks, put more capital into the economy and hopefully spur economic growth,” says Taylor Griffin, who advises Republican campaigns and served in the Treasury Department under President George W. Bush.

Democrats say it’s only fair that people who have succeeded in amassing wealth should pay a larger share of the nation’s expenses. Higher rates did little to discourage investment during the 1990s, when Bill Clinton was in office and the economy boomed. During that period, Obama said last month while explaining his tax plan, “we created 23 million new jobs, the biggest surplus in history, and a whole lot of millionaires, to boot.”

The election is not the final word on next year’s tax rates. Both houses of Congress would have to approve any changes. Lawmakers have been deadlocked for years on taxes and spending, so any changes would likely be part of a broader bargain to postpone or avoid the so-called fiscal cliff at the end of 2012.

That’s when automatic government spending cuts would take effect if lawmakers can’t agree. In another blow, if no deal is reached, tax rates for everybody would return to the higher levels in effect before a series of cuts first passed during the Bush years.

Dividend rates for the highest earners would be almost three times as high, “a huge increase,” says Raymond Radigan, managing director with U.S. Bank’s wealth management division.

Retirees and others who rely on investment income, even if they’re in lower tax brackets, could find dividend-paying stocks less attractive, says Adrian Day, whose Adrian Day Asset Management invests about $180 million for wealthy clients. To replace the lost income, they might buy riskier assets like junk bonds, Day says.

Yet raising the tax rate on dividends wouldn’t necessarily hurt dividend stocks. Some companies might simply eliminate their dividends, says Cliff Caplan, a financial planner with Neponset Valley Financial Partners in Norwood, Mass.

Apple, for example, announced its first dividend in July, after running out of other uses for its colossal cash reserves. If the tax rate on dividends nearly triples, Caplan says, “I can see them saying, ‘Screw it. Why pay it out when your investor is going to get killed on taxes?”‘

If the universe of dividend stocks shrinks, people who need reliable income would rush into the remaining options. Those would include stocks like utilities, whose regulators sometimes require dividend payouts; and those that must pay out their profits to enjoy lower tax rates, like real estate investment trusts and some energy partnerships.

If many other companies stopped paying dividends, Caplan says, demand for utilities, REITs and energy partnerships could surge, boosting their share prices.

The proposed changes to capital gains rates are unlikely to have much effect on markets or on the economy, several experts said. Caplan calls that debate “a lot of hooting and hollering about nothing.” Investment was strong when rates were much higher, before and during Ronald Reagan’s presidency, says Caplan, who has managed money almost 35 years.

It’s nearly impossible to plan for either possibility, expshe adds that the plots are “fraught with merciless aggression, vicious brutality, and deadly hostility.”

Also, sex. When Rapunzel first let her hair down for the prince, let’s just say the girl really let her hair down.

There is no definitive version of any of these stories, as they stem from oral traditions the world over, and the characters are more archetypes than individuals.

Consider Cinderella, the virtuous housemaid who cleans up well. She is the “quintessential innocent, persecuted heroine who goes from rags and a state of squalor to riches,” Tatar notes, and “has been reinvented by nearly every known culture.”

She’s also at least 1,200 years old.

She is known as Yeh-hsien in her first known appearance, a Chinese tale dating to about A.D. 850. (Instead of a handsome prince, her savior is a 10-foot-long fish. Freud would have loved this.)

More than a century before the Grimm brothers’ stories, France’s Charles Perrault included her in his hugely popular “Tales of Mother Goose,” calling her Cendrillon. The Grimms named her “Aschenputtel,” as she had to sleep in the ashes of the hearth. By 1893, a collection of known Cinderella tales found 345 versions.

Today, there is no counting.

There is the Walt Disney iconic version, the Rodgers and Hammerstein’s musical, the remakes and the sequels. There is “Cinderella” the Korean horror flick; “Cinderella 2000,” a sexploitation flick from the late 1970s; and “CinderElmo,” the Sesame Street take. Then there are modern retellings, changing the name but not the story line: “Working Girl,” “Pretty Woman,” “Ever After,” “Maid in Manhattan.”

This proliferation of the tale is in no small part due to Jacob and Wilhelm Grimm.

Academics from a learned background, they set out to collect oral tales from unlettered peasants. It was to be a scholarly endeavor, designed to preserve what they said were inherently German tales from encroaching industrialization. Although the pair often credited the stories to unlettered villagers, it later emerged that many of their sources were actually their friends and peers, not a village house frau gassing about “Snow White” while slopping the hogs.

The brothers, born a year apart, were extremely close. They worked at desks facing one another and lived in the same house for most of their lives. Only Wilhelm married. They were devoted to collecting and publishing folklore, songs, ballads and language studies.

They were still in their late 20s when they published the first volume of “Tales,” in 1812, the first of a two-volume collection of 156 stories. To the brothers, these were “last echoes of ancient myths,” derived from pagan days. They called them “marchen,” or fairy tales, and they could be brutal.

When Aschenputtel finally marries her prince, the doves on her shoulders peck out her stepsisters’ eyes. The tales of the era could be bawdy (like the French version of “Little Red Riding Hood,” where she goes all pole dancer) or horrifying, like “How Children Played Played Butcher With Each Other.”

This one-pager, included only in the Grimm brothers’ first edition and in this bicentennial edition, tells how one sibling cuts his brother’s throat with a knife as if he were a pig at the butcher shop. Their enraged mother takes the knife out of his brother’s neck and plunges it into his heart.

The tales also could be blatantly anti-Semitic, like “The Jew in the Brambles,” included here in a section titled “Tales for Adults.”

Once published, the stories began to have a slow but steady rise in popularity, with an English translation in 1823. The brothers had anticipated an audience of fellow scholars. They were alarmed when they learned that parents were reading them to children – Rapunzel gets preggers up there in the tower! – and they put out an abridged edition, just for children, of 50 stories.

And over the course of six more editions and 40 years, they further rewrote the sex out of the stories, polished the prose, and made the once-oral tales into increasingly longer, literary flourishes of adventure, magic, cruelty and heroism. Stepmothers were inserted as the frequent villain (getting moms off the hook), nobody has sex (at least in the story) and the little “Butcher” story – well, that one was dropped entirely.

By the dawn of the 20th century, the stories were hugely popular. It set into play a new canon of literature: stories for children that featured all the terrors of childhood, set into short, sharp tales that are filled with poison apples, magic spells, talking wolves and cannibals lurking in the shadows.

“It’s really the beginning of children’s imaginative literature,” Tatar says. The kind of book you might find in the Hogwarts library.

bc-books-grimm-repeat (TPN)

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