> > Koushik Sekhar wrote: > > > > Can anyone explain why ordinary Americans are not objecting to tax > > cuts (such as dividend tax cuts) that will only favour the top > > percentiles of the wealthy ?
Bryan Caplan wrote: > Among other things, this assumes that people's views on tax policy are > driven by self-interest. Most of the empirical evidence finds that this > is false. For a good summary, see Sears and Funk's chapter in Jane > Mansbridge, ed., *Beyond Self-Interest*. Bryan, Could we rephrase that as, "Americans are not as selfish as Democrats would like them to be?" ;-) Keep in mind that a huge percentage of Americans own stock. I don't know the latest figures, but it's at least a third, maybe a half. Certainly not just the "top percentiles of the wealthy." As others have pointed out, dividend tax cuts may not favor the wealthy at all. Lots of older people (including my grandmother) are not rich, but live off the dividends from stocks they or their spouses got from their employers decades ago. (Putting aside the advisability of holding stock in one's own employer... .) Generally speaking, the richer you are, the more you will prefer capital gains rather than other income, since the gap between the capital gains tax rate and the regular income tax rate is larger. Since rich people are more likely than others to sit on corporate boards of directors that determine dividends, this may results in dividends being too low for ordinary (non-rich) shareholders. On other words, taxing dividends more than capital gains makes rich people transfer wealth from my grandmother to her broker (if she has to sell stock, and therefore pay a commission, to get her money). --Robert
