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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments
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To: RockyBalboa who wrote (17484)1/16/2003 7:31:09 PM
From: RockyBalboa  Read Replies (1) of 18998
 
Abolishing the tax on dividend
or
how to further strap companies from their blood - equity.

The planned tax relief on dividends is the wrong signal to the economy. It redistributes money from corporations (which usually have a much higer internal rate of return and or higher shadow cost of money) to mostly wealthy individuals where it likely increases the savings rate. That way the trend to reduce corporate equity is further increasing, undermining what has been usually one of the strengths of the U.S. economy. As opposed to asian or european companies U.S. companies usually had backed their assets by balance equity at an acceptable rate.
Other economies often went the opposite way, namely by slashing corporate taxes but imposing dividend taxes.

As a result of the ideas of many companies to either introduce or raise the dividends, much capital usually considered being long term will flow the wrong way.
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