[PEN-L:33616] RE: taxing dividends

["Ellen Frank" <frank@xxxxxxxxxxxx>]

This idea of eliminating the tax on dividends is outrageous on
so many levels, one hardly knows where to start.
First. Any money that flows to the stock market in search of
tax free dividends will almost certainly be coming from the
bond market, driving up yields.
Second. To the extent that this puts pressure on firms to actually
increase dividend payout, this means less funds available
internally for investment.
Third. Bush was quoted yesterday saying that this will
encourage people to buy stocks and thus will encourage
"investment." Which only makes sense if you don't know
what investment means.
Fourth. This double-taxation issue makes me want to scream.
All income is double-taxed.  Workers pay payroll taxes and
then pay income taxes on the pre-payroll tax income.  Everybody
pays sales taxes out of income that has already been taxed.
I pay income tax on my income, then my hairdresser pays
income tax on my income when I transfer it to her.
Fifth.  Ari Fleischer said yesterday that the tax system shouldn't
"penalize people who save and plan for the future."  This sums
up the Bush philosophy.  Rich people are simply thrifty and
the poor, wanton.
Finally, while I'm on this rant, the plan is also said to contain
funds for "re-employment" rather than "unemployment" insurance.
The idea is that the unemployed would receive a lump-sum payment
which they could use to seek work or retrain.  If they find work right
away, they keep the money.  This, supposedly, eliminates the
"incentive to remain unemployed" of the current UI system.  So much
for involuntary unemployment.

Ellen







pen-l@xxxxxxxxxxxxxxxxxxx writes:
Nobody seems to have mentioned this -- even at a time that the
municipalities are so crunched.


On Tue, Jan 07, 2003 at 08:32:59AM -0800, Devine, James wrote:
> yup. Current equity prices (for stocks that pay dividends) are slightly
> depressed by the expectation that the owner has to tax on dividends. With
> greater expectation that the dividend tax will go away (so that after-tax
> dividend incomes rise), there will be a shift of funds away from
> non-dividend-paying stocks and bonds of all sorts.
>
> ------------------------
> Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine
>
>
>
> > -----Original Message-----
> > From: Michael Perelman [mailto:michael@xxxxxxxxxxxxxxxxx]
> > Sent: Tuesday, January 07, 2003 8:32 AM
> > To: pen-l@xxxxxxxxxxxxxxxxxxx
> > Subject: [PEN-L:33611] taxing dividends
> >
> >
> > Won't the end of the tax make municipal bonds less attractive, hurting
> > municipalities?
> > --
> > Michael Perelman
> > Economics Department
> > California State University
> > Chico, CA 95929
> >
> > Tel. 530-898-5321
> > E-Mail michael@xxxxxxxxxxxxxxxxx
> >
> >

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx