Here is the mini-column i sent out last night:
I spent some time today digesting the Bush 10-year, $670 billion "Growth, Job Plan" - and consider it questionable that it will do either. Having said that, I don't find much to cheer in the Democratic counter plan either. This isn't a political commentary, but a fudiciary one. Eliminating dividend taxation is a great move in that those moneys are now double taxed. However, based on the demographics of dividend holders, 40% off the benefit will go to the 2.5% of seniors with incomes greater than $200,000 - not a group likely to take their saved taxes and spend it on consumer goods. Another 75 percent of the benefits would go to the 19 percent of elderly individuals with more than $75,000 in income.
As for the tax cuts, something I am always for, I'm not sure that returning $70 billion to John Q Public is going to end up back in the coffers of retailers or car dealers. With the long market downturn, history shows that people become more conservative and start saving again. Given the current unemployment, that is even a more likely scenario as people save for possible setbacks.
The only thing that may actually spur job growth is the reemployment benefit plan, whereby qualified workers could use up to $3,000 to purchase job training and other services, such as child care and transportation, to help them look for a job. Recipients would be able to keep the balance of the account as a "cash re-employment bonus" if they find a job within 13 weeks. In all likelihood, the jobs that will be created will be in that "training and other services area" to soak up the $3,000 benefits, as anyone getting a job and having money left over will use it to pay bills.
The market was not overly enthusiastic with the plan either, although I do expect to see a few large cap industrials and other dividend paying stocks increase in value over the next month or so. My general opinion is that they will make better stock plays that fund buys, though, as there just aren't a lot of quality dividend stocks out there.
Scott McCormick |
