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Should Payouts (For Dividends) Be Tax-Free Zones?
Barron's ^
| Monday, August 19, 2002
| By SHIRLEY A. LAZO
Posted on 08/17/2002 5:47:45 PM PDT by shrinkermd
Edited on 04/22/2004 11:46:55 PM PDT by Jim Robinson.
[history]
Is it an idea whose time has finally come? Can Congress help the stock market by eliminating the corporate dividend tax -- or the double taxation of dividends?
In his Aug. 12 Investment Strategy Weekly, Edward E. Yardeni, chief investment strategist at Prudential Securities, shares his views on what can be done to boost stock prices and revive the confidence and wealth of individual investors.
(Excerpt) Read more at online.wsj.com ...
TOPICS: Business/Economy; Government
KEYWORDS: dividends; doubletaxation
Only class envy keeps dividends taxed twice.
To: shrinkermd
They should only be taxed once. At 10% or less (OK, I beleive that all income tax should be less than 10%, but that's for another thread).
2
posted on
08/17/2002 6:10:50 PM PDT
by
meyer
To: shrinkermd
Well clearly the double taxation of dividends is a drag on economic performance. The question to be decided (since there is no way Congress would allow both corporation and the investors to avoid taxation) is which side pays taxes on income. This proposal seems to say that after the corporation has paid its taxes, the after-tax earnings that aren't retained will be paid out as a dividends to shareholders. The shareholder then gets the tax free windfall.
Under the proposal that I believe Charles Schwab made (and there was a WSJ editorial along the same lines), the corporation would get the windfall, any pre-tax income paid out as dividends would be tax free. The shareholder would then pay income taxes on whatever dividends they receive.
If I've mangled the economics of the issue, I apologize. I imagine that roughly the same amount of tax would be raised under either plan. It would seem that the difference in the two proposal is whether it benefits the economy more to provide a windfall for the corporation or a windfall to the shareholder.
To: shrinkermd
I believe Milton Friedman has been arguing for this for at least forty years.
4
posted on
08/17/2002 8:58:34 PM PDT
by
Erasmus
To: shrinkermd
A lot of people have their dividends re-invested into more shares of mutual funds and stocks (through DRP programs) and still have to pay taxes on them. That burns me more than being taxed on dividends given out as cash.
It'd be a great improvement if you could re-invest your dividends tax-deferred until you sell shares, upon which the capital gains rate would apply. I could fill out my Schedule B much quicker that way.
To: Maximum Leader
If the Schwab proposal were the one taken, then almost certainly most major corporations with signifigant dividends would immediately adjust their payouts to reflect untaxed amounts (I can only imagine the most marginal, otcbb or pinksheet stock not doing this if they actually paid a dividend, the outcry otherwise by shareholders would be huge).
While it is almost certain the Looters (i.e. DNC, media, some GOP) would wail incessantly, it would be far less than would the outcry would be if div. were to be made tax free to the individual (i.e. the rich as defined by the department of truth...)...
To: shrinkermd
It is the owners of the corporation who pay taxes on profits. You people need to get your stories straight.
Those who want an elimination of corporate taxes make the claim (in order to brainwash the masses to support their goal) that ALL corporate taxes are paid by the end user (consumer)....That eliminating taxes on corporations (elite citizens) life will somehow be better for everyone. It's even been floated that corporate CEO's are "job creators" and somehow deserve special treatment as well. There of course is no past proof or future guarantee of that.
If I'm not mistaken, and I'm not, it's leftist, socialist countries that extend special privileges, especially tax advantages to the elite. The fact that a Republican or so called conservative proposes it doesn't make it any less socialist/elitist.
7
posted on
08/17/2002 10:28:48 PM PDT
by
lewislynn
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