Subject: Re: a stocks and dividends question
From: robin <robin@roblimo.com>
Date: Thu, 09 Jan 2003 19:31:51 -0500


> Dividends are taxed at the shareholders'
> marginal tax rate, usually around 40%
> give or take. 

This assumes the stockholder is in the top-top income bracket, so rich 
he or she can afford to vote Republican AND make big donations to the 
Cato Institute. :)

A family breadwinner with 3 kids who earns $30,000/year in salary, plus 
$3000/year in dividend income, would only pay the comparatively low rate 
he or she pays on earned income on that dividend income -- except the 
dividend income is not subject to payroll (Social Security) tax, as is 
earned income up to something like $78,000/year.


> 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.

Funny how this didn't "distort capital markets" until fairly recently. 
But I'm just an old, broken-down cabdriver who always thought the point 
of a business was to take in more than it spent, year after year, decade 
after decade, so please don't listen to me.

Oh, wait! I just remembered! Capital gains used to be taxed at a much 
higher rate than they are now. *That's* why there's a bigger difference 
now than there used to be.

Forget everything I just said. Sorry. In the future I will try to get 
all my money from capital gains and inheiritance instead of working for 
it or expecting stocks to pay dividends. Either that or move back into 
the underground economy and accept nothing but cash payment, which is 
the working person's only viable way to cut taxes down to Rich People 
levels these days.

I still believe in patriotism, honesty, everyone doing their fair share, 
and other obsolete values, too. Silly me. You know, I actually let 
people into my lane on the expressway when a merge comes up? (sigh) I've 
got to stop this kind of thinking. And no more free publicity work for 
my local LUG, either. They should PAY me. (Off the books, of course.)

- Robin "too old-fashioned to be a conservative" Miller