Wei Dai > > Would any company give dividend then? > I believe so: dividends are certain, capital gains are uncertain.
But you could confirm this by checking the situation in estonia where
they have done away with the corporation tax
- jacob
>
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> Wei
Dai
> <[EMAIL PROTECTED] To:
[EMAIL PROTECTED]
> om>
cc:
> Sent by: Subject: Re: questions
about dividend tax cut
> owner-
ARMCHAIR@g
>
mu.edu
>
>
> 14/01/2003
08:40
> Please
respond
> to
ARMCHAIR
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> On Mon, Jan 13, 2003 at 01:44:59PM -0800, Fred Foldvary wrote:
> > There is also a supply-side effect from cutting the marginal tax
rate,
> from
> > less uncertainty about the company as it shifts to less debt and
more
> > equity, as well as more investor confidence when the profits are
sent to
> > the shareholders rather than retained by possibly theiving
executives.
>
> Any idea why the dividend tax, instead of the corporate income tax, is
> being proposed for a cut? If we want to end double taxation of
dividends,
> it makes more sense to me to eliminate the corporate income tax
instead of
> the dividend tax.
>
> Cutting taxes on dividends while keeping taxes on capital gains seems
to
> provide a perverse incentive for companies to retain as little
profits as
> possible, leading to a higher rate of corporate bankruptcy in the
future.
> I predict we'll also see companies issue new stock and then
immediately
> distribute the capital as dividends in order to dilute their stock
value -
> the opposite of the stock buy-back programs that companies undertake
today
> to avoid paying dividends.
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