[Dog Gone]

"Most Americans who have investments in the stock market have it through their IRA or their 401K, so that is tax-free anyway," said House Democratic leader Nancy Pelosi of California.

That is an utter lie. Dividends that are within an IRA or 401K are not taxed at the time they are put into those accounts, but they certainly are taxed at the time they are withdrawn. That's hardly "tax-free".

[keats5]

Linda Vester called Geraldine Ferraro on that same point today. Ferraro was claiming that 401 plans are tax free, and Vester interrupted and corrected her in no uncertain terms. We still pay taxes on tax deferred investments. Ferraro looked dumb.

[rwfromkansas]

Right. It would be accurate to say tax-deferred, but that is not what they are saying. Only Roth IRA's are completely non-taxed.

[muawiyah]

Those dividends are taxed at personal income tax rates. However, that income has been deferred and any earnings on it accrue tax free until withdrawn.

Technically speaking, within the current tax year Pelosi is correct.

[ImphClinton]

And will continue to be taxed under Bush's plan.

That is right the very rich (top 1%) will stop paying taxes on dividends but you will continue to pay the tax when you withdraw the money from your retirement accounts.

That is why the dividend tax repeal needs to happen at the corporate level. That way everyone will get more and higher dividends. The Corporations will be able to give out these dividends tax free and will thus be encouraged to do so. I do not see how the dividend cut at the shareholder level encourages corporations to increase dividends at least directly.