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

To: greenspirit who wrote (339964)	1/8/2003 12:08:45 AM
From: American Spirit	Read Replies (1) \| Respond to of 769667

Dividend tax cut was no surprise. Everyone expected it. What's that writer talking about? Pro-growth? I think it doesn't address the worst problem we have which is our hard-hit middleclass and state governments. And where're the jobs programs? Unemployment a big problems. Bush's plan will not create any jobs. Or very few.

To: greenspirit who wrote (339964)	1/8/2003 1:00:49 AM
From: DuckTapeSunroof	Read Replies (2) \| Respond to of 769667

Re: "Bush's Big Bang" >>> A few observations: >>> 1) It WILL disadvantage corporate and municipal bonds (interest rates on them, and even on federal debt, may have to rise to be competitive... raising the cost of borrowing for local and federal government), and REITs, vs. preferred stock. There will undoubtedly be a surge in preferred stock issuance instead of bonds. >>> 2) It WILL lead to stockholder pressure on certain companies (ie, CSCO, MSFT, etc.) who are sitting on large cash balances and currently pay no dividends... to begin paying out some of that cash in dividends. >>> 3) But this 'stockholder pressure' may continue to be resisted because: The companies get no tax benefit if they pay out earnings in dividends... they may prefer to retain their earnings for R&D, acquisitions, and stock buy-backs (which they use to offset the stock dilution effects caused when stock options are exercised... which is STILL their preferred method of paying compensation as they don't have to expense it on their corporate balance sheets, and they get a TAX DEDUCTION when they issue the options.) It is still a FAR better deal financially for these companies to go with the tax deduction instead of paying dividends. To summarize: their is NO FINANCIAL INCENTIVE for dividend payouts by many of these companies. There would have been a REAL BIG BANG EFFECT though if Bush had taken the correct road, and made earnings paid out in dividends by companies a TAX DEDUCTION to the companies. In other words: tax the dividends at the individual's level, but not at the corporate level... the exact opposite of what he chose to do. Under the new rules, companies have a tax deduction for interest they pay on borrowed money (thus, creating an incentive for them to go into debt), but NO TAX INCENTIVE to pay dividends. Until, and unless stock options are required to be expensed, companies who use a lot of options for compensation (even those sitting on a lot of cash) have no real financial incentive to pay dividends. Bush fails Economics 101 on this one. It looks more important from a PR point-of-view, than from an economic one. The WRONG way to go about a desirable goal. This new plan helps the top individual income brackets (because of their disproportionate ownership of dividend-paying stocks outside of retirement accounts) but has very little stimulative effect on the economy, and does NOTHING for capital spending by corporations... which is the single largest weak point in our present day business conditions. A "Shrub" of a tax change. Huge deficits in exchange for little stimulative help for the economy, no help at all to corporations, and a bonanza for Fat Cats.

To: greenspirit who wrote (339964)	1/8/2003 12:56:59 PM
From: Neeka	Respond to of 769667

Dividends Ten That Could Pay Out Billions Ari Weinberg, 01.07.03, 7:07 PM ET NEW YORK - According to the White House, ending the double taxation on dividends would return $20 billion to the economy this year alone. And that calculation is based only on companies that currently make payouts. If the Bush plan goes into effect substantially as proposed, many companies that don't pay out dividends would rethink their policy. Already both Dell Computer (nasdaq: DELL - news - people ) and Oracle (nasdaq: ORCL - news - people ) have indicated they might start paying dividends if the Bush Administration's plan is enacted. Roughly 30% of the S&P 500 index companies do not pay dividends. Seven are among the 30 most valuable businesses in America. Moreover, of the 50 S&P 500 companies with the most cash on hand, 13 of them didn't feel the need to pass the bucks back to their shareholders. Below are ten S&P 500 companies that have billions in cash on hand and pay no dividends. Lots Of Cash And No Dividends Paid Company Business Cash/Short-Term Investments ($mil) Revenue: Last 12 Mos. ($mil.) Net Income: Last 12 Mos. ($mil.) Common Shares Outstanding (mil.) Price (Jan. 7) Microsoft (nasdaq: MSFT - news - people ) Software $40,475 $29,985 $9,272 $5,346 $55.80 Cisco Systems (nasdaq: CSCO - news - people ) Communications equipment 10,311 19,312 2,779 7,233 14.60 Oracle (nasdaq: ORCL - news - people ) Business software 5,481 9,365 2,042 5,269 12.69 Applied Materials (nasdaq: AMAT - news - people ) Semiconductor capital equipment 4,930 5,062 269 1,648 15.30 Apple Computer (nasdaq: AAPL - news - people ) Computer hardware 4,337 5,742 65 359 14.85 Dell Computer (nasdaq: DELL - news - people ) Computer hardware 4,304 33,730 1,975 2,581 28.65 Amgen (nasdaq: AMGN - news - people ) Biotechnology 4,042 4,881 -1,685 1,282 50.24 AT&T Wireless Services (nyse: AWE - news - people ) Wireless services 3,751 15,112 -3,420 2,302 7.10 Analog Devices (nyse: ADI - news - people ) Integrated circuits 2,898 1,708 105 366 27.74 Qualcomm (nasdaq: QCOM - news - people ) Communications chips 2,795 3,040 360 779 37.26 Source: MarketGuide Quarterly via FactSet Research Systems forbes.com