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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.16

+0.2%

Dec 26 9:30 AM EST

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To: RetiredNow who wrote (60831)	8/7/2002 11:37:50 AM
From: BWAC	Read Replies (1) of 77400

Why even tax a dividend in the first place? At any rate. It has already been taxed once at the corporate level. CSCO could maybe pay you a $1 dividend starting right now to begin distributing excess cash out to shareholders. But what a stupid use of capital that would be. The $1 used to be $1.42 in earnings before CSCO paid income tax on it. If it gets distributed to the shareholder as a dividend the $1 now becomes as little as 65 cents. What started as $1.42 would have passed 77 cents to the government as tax and 65 cents to the investor. Ain't that great? Some companies are bound and determined to pay them. That is fine. I'll take it. But I sure can't fault a company like CSCO or MSFT for not subjecting your earnings to double taxation. Problem is that these companies have accumulated so much cash that they can't effectively use it anymore. There needs to be a tax free method to distribute some of this cash hoard back into the economy. Back into the shareholders hand. And stock buybacks are an imperfect answer.

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