Horgad, Part of the impact depends on how they do it. Removing the tax on straight equity dividends will have minimal impact on other fixed income securities or on the economy. It will make the wealthy wealthier and hopefully, encourage corporations to spend their excess cash, if they ever have any again, more judiciously. However, if the exclusion is extended to preferreds, it will destroy both the muni and corporate bond markets, demolish state and local govts., kill the mortgage boom that has propped up the creaky economy, and demolish most brokerage firms and banks. Other than that, it is a good idea. <g>
However, that doom and gloom being said, we are likely to get a compromise that will not allow the Republicans to throw us into a Depression immediately.
On the equity side, favoring the rust belt, high debt dividend payers will make it more expensive for smaller and more innovative cos. to raise capital. Tech and biotech will especially become disfavored. Every inventor, entrepreneur or innovator will have to give up more of his or her stake to get financing and most will find the competition for funds excluding them from cash. |
