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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting

QCOM 173.20

-3.3%

3:59 PM EST

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To: John Biddle who wrote (30902)	1/8/2003 5:46:18 PM
From: Art Bechhoefer	Read Replies (1) of 196536

John, the swinging pendulum theory (that investors were moving into dividend paying stocks before the proposal to cut the dividend tax) is the kind of spin one would expect from a generally conservative newspaper. Investors will choose between dividends and growth/capital appreciation according to their own particular needs. If prospects for capital gains look poor, then investors will seek less volatile opportunities where dividends are part and parcel of the expected return. The effect of the proposal is to increase investor interest in dividend paying stocks and DECREASE motivation to invest in growth stocks. To neutralize this bias, the administration added a provision to cut capital gains taxes according to the amount of retained earnings, but calculating such a figure would make it almost impossible to implement. There are other, better alternatives. One is to exempt the first $1000 of dividends and/or interest from taxes, which would help many small investors. This feature used to in the income tax statutes back in the 70's (with a maximum of $400 exempted). Another is to index capital gains for inflation, thereby compensating for the additional risk one takes when investing for growth. At least these alternatives can be easily implemented, without at the same time reducing the NECESSARY REVENUES that the government must collect in order to avoid increasing the tax burden on our children and grandchildren. The proposal is not good for companies like QUALCOMM. It was not well thought out, but that's nothing new, is it? Art

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