Wednesday, January 08, 2003

The End of Dividend Taxes

Two things about this issue--first of all, Republicans are fond of saying that more than half of America has money in the stock market, and therefore a cut in Divident Taxes will benefit all. In fact, most small investors now have their money in 401k's or company IRAs that are already untaxed. Secondly, those who benefit from this tax the most are going to be those who's portfolios are large and diverse. I don't invest for dividends myself--and I don't know anybody who does. I invest because I think the value of the stock is going to go up. If I had much more money than I do, perhaps I would feel different, and I would drop money into blue chip companies who always pay dividends--but so far that's not been my plan. So William F. Buckley's postering aside, this is a tax break for the wealthy.

Second, it's clear to me at least, that this is not going to stay part of the plan for long. It's half of Bush's plan and it's terribly easy for Democrats to criticize. So he "compromises" and eliminates this part of his plan to take it down to the more manageable $3 to $3.5 million.

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