The trouble with the dividend tax-cut

Townhall.com ^ | April 29, 2003 | Bruce Bartlett

[dwswager]

President Bush’s plan to eliminate the double taxation of corporate profits, by exempting dividends from taxation, appears to be on life support. Even before his tax package was reduced from $726 billion to $550 billion in the House and $350 billion in the Senate, the proposal was in trouble. Now, it looks very sick indeed. ... In coming days, President Bush will have to make some critical decisions about his tax plan as the House Ways and Means Committee and Senate Finance Committee begin to mark-up a bill—a task that they must finish by May 8. He should not let pride in his own proposal stand in the way of achieving something that will help the economy now.

[dwswager]

I agree with Bartlett that the dividend cut was tax reform as are other proposals in the original package. I think the best thing if we get limited to $350 Billion (being reported that they are looking for $100 Billion in spending cuts to boost it to $450 Billion) Bush ought to jam as much of the cuts and limit them to less time. For example, cut dividend tax for 2 years and the "cost" is much lower. Do this for all the structural items on the list like expensing capital equipment. Then run the election in 2004 on the basis of "Democrats want to increase your taxes". It is much easier to get the cuts extended (who set up this anti-liberty system; they should be hung) than to get them enacted in the first place. This is exactly the reason Bush agreed to phase in the tax cuts over 10 years in the first place.

[hunter112]

I always wondered why the proposal for the dividend cut dod not include a cap, as with every other tax break under the sun. This would go a long ways toward insulating GWB from criticism about being only for the rich guy.

[RS]

I don't mind dividends being taxed as it is income to the individual who ( if a citizen ) has the right to vote...But...

NO business profits should be taxed...NONE

Keep all taxation directly on the people who have the right to vote on it ( or for their representatives)

NO business should be allowed to contribute to anything - all profits should be returned to the owners who will be taxed on it.

[yatbalaam]

What kind of cap would you put on it? 401k's don't pay dividends taxes. Retirement funds don't pay either. On my $50,000 worth of mutual funds I paid roughly $1000 in dividend taxes and capital gains taxes combined.

Salaries over $87,000 don't pay additional payroll taxes (Social Security). Making the cut there would automatically mean that it was going to lower incomes, whereas dividend tax cuts will always be perceived tax cuts targeted to the rich.

[cherry]

all I know is that we need a tax cut...if not just for my morale...lol

. dividend would help only a little....I am in favor of eliminating the full marriage tax right now, not several years down the road....

[bruinbirdman]

AMEN!!! why has bush not realized this yet?

Don't underestimate him. He is still posturing. They haven't even gotten to conference yet.

yitbos