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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75377  
Subject: Re: John Bogle wants to raise your taxes Date: 12/28/2011 1:57 PM
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I totally agree with taxing dividends as ordinary income if the corporations didn't pay taxes on the money they distribute as dividends.

REITs already do this; they are taxed as ordinary income (not at preferred rates) because they can pass dividends through without paying taxes on the distribution (i.e. if there was no "double taxation" of dividends. The shareholder (who owns the company) already gets taxed on their share of the profit, and if they want to receive some of that profit in a cash payout, it is taxed again.

I tend to think dividends are a stabilizing force in the market; dividend stocks tend to have less volatility than those that don't pay dividends and I think that's a good thing. Discouraging dividend payouts, therefore, is not a good idea -- and fully "double taxing" them is a good way to discourage it.

As far as capital gains go, longer term holdings need to have some sort of inflation indexing component to be fair. If I buy an asset for $10,000 today and sell it for $20,000 in 20 years BUT prices have doubled in those 20 years, I have gained *zero* in real dollars but half the sale price is taxed as a "gain".

Address those two issues and I would 100% support treating dividends and capital gains as ordinary income.

#29
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