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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: American Spirit who wrote (339962)	1/7/2003 11:50:32 PM
From: greenspirit	Read Replies (3) \| Respond to of 769667

Bush’s Big Bang Dividend tax relief leads the pro-growth charge. January 7, 2003, 8:00 a.m. Larry Kudlow nationalreview.com President Bush has surprised nearly everyone with his decision to propose a big-bang economic growth package that includes a 100% tax exemption on dividends received by individuals. Eliminating the double taxation of corporate dividends will raise stock market values, increase investor returns, and improve both corporate governance and corporate finance practices, in effect becoming the most significant pro-growth tax reform since President Ronald Reagan slashed personal income-tax rates twenty years ago. This policy change will lower the effective tax rate on dividends paid from corporate profits to 35% from roughly 70%. Taxpayers receiving dividends will now keep 65 cents of each new dollar of corporate profits rather than the 30 cents they now retain under current tax law. Since individuals and businesses spend and invest their money more wisely than government, this tax reform will make the economy more efficient and better able to grow to its potential. The move will also free up more investment resources for shareholders and corporations, thus making more funds available for entrepreneurship, business expansion, and job creation in the years ahead. Investors, of course, will now demand greater dividend payouts from companies — a good thing. Cash dividends will be tax-free, while interest payments from corporate bonds will be taxed at the top personal rate (which could drop to 35% under the president’s new proposal). Shareholders will keep 100 cents on each new dividend dollar, compared with only 65 cents on each dollar of interest paid from corporate bonds. That will force corporations to reduce their issuance of new debt and rely more heavily on dividend-paying stock finance. This tax-induced shift in shareholder demand from interest-bearing bonds to dividend-paying stocks will have wide-ranging benefits. It will stop firms from over-borrowing and debt leveraging up to their eyeballs — a practice that has worsened economic downturns and hastened business bankruptcies. And as the system of corporate funding better balances equity and debt, the business sector will grow healthier and the economy stronger. Also, a new model of corporate governance will take hold. Just as taxpayers wish to keep more of what they earn from the government, tax-free dividend payments will encourage shareholders to demand more of what corporations earn. This will force companies to reduce their excess cash-on-hand and pay more money out to their shareholders. In recent years too many CEOs have used corporate cash for ill-conceived acquisitions that all too often put empire-building over higher shareholder returns. Now boards of directors will pressure management to turn the cash over to investors. This change in corporate behavior will streamline operations and avoid the failed over-conglomeratization that sank stock market prices in the 1990s, especially in the telecom, media, and energy businesses. Many firms, especially technology companies, will now be forced to start paying out their unnecessarily high cash balances to shareholders. Outfits like Microsoft, Cisco, and Dell will undoubtedly go down this road. Additionally, investors will more often judge corporate creditworthiness on the basis of dividend yields (dividends divided by stock prices) instead of conflicted research reports. In fact, greater dividend payouts and yields will become the key benchmarks in judging the worth of stock investments. All this should be a much-needed tonic for the major stock-market indexes. Since the current economic slump began in 2000, the stock-market decline has been the economy’s central problem. Shrinking market capitalizations have damaged corporate creditworthiness and frozen business operations. In all too many cases huge stock-market losses induced CFOs to play fast and loose with accounting ethics. Investor confidence evaporated as Worldcom, Enron, Tyco, Adelphia, and a list of others grabbed the headlines. So, last year was the first since 1912 that an early economic recovery was accompanied by a plunging stock market. President Bush’s bold decision to eliminate the double taxation of corporate dividends will help restore investor confidence and the vitality of American businesses. Since business creates jobs, a healthier corporate sector is crucial to a full flushing-out of the nascent expansion. The Bush administration's new growth package will also include a speed up of income-tax cuts for all brackets, a substantial cash-expensing bonus for small business equipment write-offs, and a quicker implementation of child tax credits and marriage-penalty deductions. Democrats, of course, are dusting off their class warfare arguments, criticizing the Bush plan as another tax cut for the rich. But this is a content-less position that has failed miserably in recent elections. The president has correctly understood his mid-term election mandate to grow the economy and win the war against terrorism. On the war front, he has proven his mettle since Sept. 11. And on the economy, he is clearly willing to invest his new political capital in pro-growth tax measures, as well as pro-market reforms for health care and prescription drugs. The nation will benefit enormously as he moves swiftly on all of these fronts.

To: American Spirit who wrote (339962)	1/7/2003 11:51:16 PM
From: steve dietrich	Read Replies (3) \| Respond to of 769667

Here's the results on a couple recent polls: Associated Press Polls suggest public has doubts about Bush economic policies, though he remains popular overall Tuesday January 7, 11:30 pm ET By The Associated Press NEW YORK (AP) -- President George W. Bush has not yet convinced the U.S. public that his economic policies and tax cuts are fair to all Americans, two new polls suggest. Nearly six in 10, 59 percent, said Bush's economic policies favor the rich, while 11 percent said the middle class, 2 percent said the poor and 23 percent said the policies treat all people the same, according to a CBS News poll released Tuesday. Fifty percent said that Bush's tax cut proposals favor the wealthy, just over a third said it favors the wealthy and those less well off equally and 4 percent said they favor the less well off, according to an ABC News poll. ADVERTISEMENT Bush's job approval ratings have remained in the low 60s, supported largely by public approval of his handling of the campaign against terror. Public approval of his handling of the economy has dipped to half, with 43 percent disapproving in the ABC poll. That's the lowest approval he's gotten on the economy since just before Sept. 11, 2001, when people were evenly split on his handling of the economy. Almost six in 10, 56 percent, in the CBS poll said they approve of the way Bush is handling foreign policy. In the CBS poll, four in 10 said the economy is good, while six in 10 said it is bad. People said jobs are the highest priority for Congress as it comes back into session, followed by health care and then tax cuts. Half said the economy was the most important issue for Congress to deal with, while a fourth said the war on terror and a fourth said Iraq. The CBS poll of 902 adults was taken Jan. 4-6 and the ABC poll of 1,044 adults was taken Jan. 2-5. Both had error margins of plus or minus 3 percentage points