Yes, lots of implications:
Bush Plan to Cut Dividend Tax Excludes Some Companies, NYT Says
By James Kraus
Washington, Jan. 9 (Bloomberg) -- President George W. Bush's plan to eliminate taxes on stock dividends for individuals doesn't apply to companies that don't pay federal income taxes, the New York Times reported, citing the president's plan and Treasury officials.
Companies with losses or those that use techniques to eliminate taxable income will therefore have no tax-free dividends to hand out, the newspaper said.
``There is less pressure on the company to shelter its income, because it will inhibit its ability to pay out dividends without tax,'' Pam Olson, the assistant Treasury secretary for tax policy, told the Times.
Companies that choose to reinvest in their businesses rather than pay dividends will also be able pass on to their shareholders a tax break that will reduce the capital gain they report when they sell their stock, the Times said.
That means the tax bill may benefit holders of such companies as Microsoft and General Motors, which don't pay dividends, while shareholders in such companies as Tyco International, which moved offshore to reduce its tax bills, won't have any gain, the paper said. |
