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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Paul Shread who wrote (27134)	1/7/2002 9:59:25 AM
From: dawgfan2000	Read Replies (1) \| Respond to of 52237

Nader Blasts Microsoft Over Dearth of Dividends January 7, 2002 Consumer activist Ralph Nader has taken up a new cause: Microsoft Corp.'s practice of not paying a shareholder dividend, a policy he says is designed to protect the company and its largest shareholders from paying higher taxes, Monday's Wall Street Journal reported. In a letter sent Friday to Microsoft Chairman Bill Gates, Mr. Nader and James Love, the director of Mr. Nader's Washington-based Consumer Project on Technology, called Microsoft's "failure to pay dividends year after year" an "inappropriate and we believe unlawful device" to shield Microsoft's profits from taxes. The men wrote that Microsoft's cash balance of $36 billion should be subject to a little-known part of the federal tax code called the "accumulated earnings tax." That tax was designed to prevent companies and their officers from accumulating excess cash as a way of avoiding dividend payouts and subsequent taxes. In addition, the two argue the lack of a dividend improperly reduces the tax burden on big Microsoft (MSFT) shareholders -- including Mr. Gates, who owns about 12% of the company. If wealthy shareholders in the highest tax bracket received a dividend, those gains would be taxed at 39.6%, traditionally the highest rate applied to ordinary income, they say. (The top tax rate for 2001 fell to 39.1%.) But if the shareholders realize stock-related gains only when they sell shares, as many do now, they are subject to the much lower capital-gains tax. "It's a tax-avoidance scheme for the big shareholders," Mr. Nader said in an interview. He added: "This thing is out of control. Has any company in history ever accumulated so much cash?" Microsoft, based in Redmond, Wash., said in a statement that it "works hard to comply with U.S. Federal income tax rules." Microsoft added that the tax code "recognizes the need for companies to retain cash to fund their businesses, and high-tech companies commonly maintain significant cash balances to support their business objectives." My take, I guess Ralph Nader has run out of things to do these days. I agree with his math, but does he expect MSFT to cash in just to make the exec's pay some taxes?? lol! they are not alone....