The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Why getting rid of dividend tax is a Bad Idea||Date: 1/6/2003 5:14 PM|
|Author: foobarista||Number: 62876 of 123001|
President Bush has announced that he will introduce legislation
eliminating income tax on stock dividends. This is a bad idea,
for the following reasons:
1. It gives the tax exemption to the wrong entities.
If corporations are to be encouraged to pay dividends, make dividends
tax deductable to corporations. This would encourage corps in the
position to pay dividends more likely to do so, and encourage ones that
already do so to have both better cash positions (due to lower taxes)
and pay higher dividends.
Dividends are so low nowadays that the tax exemption isn't going to
dramatically help many individuals, particularly since so many people
own stock in tax-deferred devices like IRA's and 401-K's (more on this