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Strategies & Market Trends : Value Investing

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To: Axel Gunderson who wrote (4679)	8/16/1998 11:04:00 PM
From: Bob Rudd	Read Replies (2) of 78627

Alex: It's my understanding that dividends paid by a corporation to its shareholders are not deductible from the company's corporate income tax, whereas interest payments to bondholders are fully deductible. Dividends constitute taxable income for the recipient, so the original corporate earnings are taxed twice: first at the corporate tax rate before the dividend is paid, then again at the shareholder's tax rate. Are you saying that dividends ARE deductible by the corporation? Bob Alex wrote: <<Actually, corporations do get a shield for distributions to shareholders. It isn't perfect, but the mantra of "double taxation" is inaccurate.>>

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