The budget mess

Originally posted by spruce112358
Absolutely not. Double taxation of dividends means companies must try to deliver returns to their investors through higher stock prices instead of profit-sharing. It is a case of government regulation interfering in the normal working of the economy again.

It makes stocks an unsuitable vehicle for retirement investment -- when in fact there would be ame way on a dividend distribution. What the corporation keeps is taxed at the corporate rate.

It's not "governmental regulation" any more than the existence of corporations in the first place is "governmental regulation". A C Corporation is separate and distinct from its owners in every way, but you want to make an exception as regards dividends. This is philosophically incoherent.

Originally posted by dryhump
I agree with this. The best thing to come out of the budget commission report was the proposal on taxes. That proposal would have eliminated all deductions and dropped the tax rates accordingly. It was a budget neutral plan, which means it didn't effect revenue at all.

Nice idea ...It will NEVER happen though. The wealthy have far too many Republican lawmakers in there back pockets. It will always be the working class that pay there fair share in taxes...NEVER the rich!

Originally posted by bill718
Nice idea ...It will NEVER happen though. The wealthy have far too many Republican lawmakers in there back pockets. It will always be the working class that pay there fair share in taxes...NEVER the rich!

It is simply untrue that the rich don't pay taxes. The top 1% pays 40% of the taxes. I believe a lot of wealthier people/ institutes would support lower rates, fewer deductions if it were truly revenue neutral.

Originally posted by spruce112358
Absolutely not. Double taxation of dividends means companies must try to deliver returns to their investors through higher stock prices instead of profit-sharing. It is a case of government regulation interfering in the normal working of the economy again.

It makes stocks an unsuitable vehicle for retirement investment -- when in fact there would be ...[text shortened]... ame way on a dividend distribution. What the corporation keeps is taxed at the corporate rate.

First of all, the fact that stocks comprise most of the retirement accounts that exist today does not square with the idea that it "makes stocks an unsuitable vehicle for retirement investment."

Also, with an S corp, the money is taxed whether it's distributed or held. Do you think that's fair to the shareholders in a publicly held C Corp?

Imagine you hold 1,000 shares of Google and you get a 1099 saying that you have to report $5,000 of income though, alas, the Board decided to hold the $5/share this year because, hey, we're looking to make a big investment next year and we could use the cash? Is that fair to the shareholder?

Taxing the corporation separately makes far more sense. It allows the Directors to make business decisions on behalf of the corporation without having to sorry about anomalies like this that would not doubt have the shareholders clamoring for dividends.

When the dividends are distributed, they take another step in the stream of commerce. Goods are taxed at every step in the stream of commerce in any case (most states have sales taxes and most other countries have either a sales tax or a VAT). It's not anomalous at all to tax the dividends when they leave the corporation to go to the investors.