Jimmy Higgins

Its a beautiful plan. You see, without a Dividend tax, people that get $1500 a month to live off of will save $180 in taxes. Instead of having only $1320, it'll be $1500! Then they can take that $180 a month and spend it on the economy.

Oh wait, can we talk?

If they get about $1500 in dividends monthly, that means they get $4500 quarterly, as dividends are given. So in order to get $4500 quarterly, and assuming an average dividend rate of $0.50 a share, that means the person would own 9000 shares. Now, assuming a value of $30 a share, that means they have $270,000 invested in the market, just that are paying the dividends alone! Uh... was this a cut for the rich or poor?

Now granted, this could help those that are retired. Their accounts could be that high. But if you are retired, I'd hardly see the issue of being afraid to spend money because of job uncertainty!

All this would do would be help rich people with over $300,000 in the market right now. They save the money, not me. I'd save about 12% on $300. Oh wow! Stop me, I'm in shock... again.

Kinross

Its not really lowering a tax. Its eliminating the double taxation that has been going on. A dividend is the profit that the company has generated distributed amongst the share holders. Since this profit has already been taxed at the corporate level and a corporation is nothing more than a collction of share holders its quite a bit unfair to tax the share holders money again.

We could lower the taxes on the poor but they already pay very little in taxes to begin with.

The elimination of the double taxation on dividends will stabalize the stock market and lessen the chance of irrational exuberance which put us in this mess to begin with. Investors will now look more at the dividend a stock pays out than its speculated future price.

MortalWombat

Only if you're talking about income tax. They still pay payroll taxes (Social Security and Medicare) as well as sales tax. Both of those are regressive taxes (the poor pay more as a proportion of income). Social Security/Medicare tax is only levied on the first $80,000, but none is levied above $80,000. And the poor pay the same sales tax rate on food, clothing, gasoline, etc. as rich people, but it's a greater percentage of their income than rich people's income.

Zar

I really love hearing Bush cry double taxation is not fair! as his main rallying point here. I cannot describe how infuriating it is to hear this from him, and to hear it repeated verbatim here by people who think that is a good enough argument.

All else being equal, I would say that I'm not sure this is a double tax any more than a tax on individual income combined with a sales tax is a double tax. But of course, the rich people get their supposed double tax removed while everyone else slogs along as before. Bollocks!

Also, this whining that "It's just not fair!" makes me sick. It is putrid and grotesque to, in the scheme of things, be so quick to point out the unfairness in this tax on the rich while not lifting a finger to relieve the gross injustice practiced every day in this nation by its elite and around the world by this nation's government. Not a peep of "It's not fair" is heard when we kill thousands of innocents and fuck around with other people's countries. "It's not fair" is not heard when refering to the debilitating financial arrangements we have with many poor nations. Fairness is not mentioned when refering to the way our government loots our social welfare coffers to pay for war and destruction. Corporate criminals dance away free with impunity and fairness isn't a rallying point there either. Fairness is totally unimportant when dealing with Iraq, Israel, Korea or anyone else. Fairness isn't an issue when we talk about Bush's silver-spoon-in-his-mouth dance through life where he got whatever daddy gave him and could screw up again and again without fear of being left out in the cold.

I don't think Bush knows what "fair" means. For him all language is important only to manipulate people into giving him and his friends everything now. Speaking and acting has no purpose but to arrogate power and prestige to himself. He has not a compassionate or fair bone in his body.

In my opinion, sucking up to Bush here is beyond the pale. I do not for one nanosecond buy this ridiculous tripe he is spoon feeding us.

queue

MortalWombat,

From here the Social Security tax of 6.2% is collected on the first $87,000 dollars that someone earns but the Medicare tax of 1.45% is collected on all money earned (there is not a cap like there is on the Social Security tax).

MortalWombat

Thanks, queue. My figures were a little off (I was going by memory), but the point still stands. Someone making $15,000 per year is taxed at 6.2% (for SS), while someone making $250,000 per year is taxed at 2.15%.

Jimmy Higgins

Wait a second. Isn't tax on interest in a back account double taxation? I earned that money at work. Then I put it in the bank, and now they tax me for the interest! A dividend is interest on a stock, so to speak.

And what about the lottery? Everyone who gets a ticket, got their ticket from their pay check that was taxed. You get all that money together, someone wins it, and then all that is taxed!

Don't tax the lottery! Don't tax the lottery! Don't tax...

While this may be technically true, cutting the dividend tax is not going to spur the economy any time soon. I don't anyone feels that's the case.

Derec

That is because "payroll tax" is not really a tax at all but more like an insurance premiums for services such as, as you said, Social Security and Medicare. Therefore it is quite hypocritical to want to lower these payments without lowering the claims under these programs. It is also ok for people earning over $80,000 not to pay them unles sof course you extend the benefits to cover these people as well.

And sales tax is not regressive but flat.

UMoC

Derec

Short answer: no.

They tax the interest because that is the new earning, they do not tax the principle, which you earned at work. With dividends, corporate earnings are taxed and then dividend payouts are taxed again. Since stock owners own the corporation, their earnings are being taxed twice.

You would have been double tax if you had $1,000,000 that you paid income tax on and that million, not just the interest, was taxed again. Germany used to have a tax just like that (Vermoegenssteuer - wealth tax) untill it was struck down by their constitutional court (Bundesverfassungsgericht) on grounds that is was double taxation.

Quote:

And what about the lottery? Everyone who gets a ticket, got their ticket from their pay check that was taxed. You get all that money together, someone wins it, and then all that is taxed!

Again, not a good analogy.
When you buy stock your income that you use to buy stock is subject to the income tax. The earnings from that stock are also taxable. That is not the issue. The issue is that
a) the same earning is taxed twice.
Let's say company makes $2.00 a share. Corporate tax is, let's say 25%. That means

b) stock owner is owner of the corporation

Since a and b are true we have double taxation.

UMoC

MortalWombat

So if it's not really a tax at all, then paying it is voluntary, right? My point was that it's regressive in the sense that poor people spend more as a percentage of their income on sales taxes than the rich.

(Edited to add a link to back up my last statement.)