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Politics : Formerly About Advanced Micro Devices
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To: f.simons who wrote (116874)6/22/2000 12:33:00 AM
From: brushwud   of 1573215
 
Should AMD's earnings be adjusted downward 32% for taxes it doesn't pay? How about 2-3 cents for dividends it doesn't pay?

It makes more sense to adjust for taxes. Dividends are just a return on investment in the form of cash instead of being reinvested in the business. As dividends approach 100% of earnings, your vehicle starts looking more like a bond (no growth) and less like a stock.

If Alan Greenspan ran the whole economy, he'd make dividends tax-deductible to corporations as bond interest is and thereby eliminate the bias in the tax code toward debt finance over equity and decentralize the allocation of investment capital by inducing more of it to wind up in the hands of shareowners instead of management. But Al Gore would never go for that because he'd focus on the tax loss to the government and the tax savings to "fat-cat" corporations.
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