Subject: Re: a stocks and dividends question
From: Tom Lord <>
Date: Thu, 9 Jan 2003 15:50:50 -0800 (PST)

       It is all about double-taxation.  

So, why does the tax break go to individuals?  Why shouldn't it be
that companies deduct the dividends they pay?  That would seem both to
give greater incentive to pay dividends, and to avoid effective
negative-progressivism in the tax code.  And, it's just common sense:
the dividend is revenue the company is spending, rather than putting
in the financial markets or using to cover operating expenses.  Ok,
maybe treating it as 100% expense isn't _quite_ right (since the
company gets back the average bump in its stock price) -- but sparing
the shareholders taxation on those amounts seems horribly regressive
to me.

	If you think about it, you can see how the double taxation of
	dividends helps distort capital markets by rewarding companies
	that pump up their stock prices while undervaluing companies
	that generate real cash flow.

Yup.  And then there's all the selfish cynics who actually take so
little pride in their businesses _as_businesses_ that these games are
what they do...