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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (15637)	1/8/2003 6:22:45 PM
From: techanalyst1	Respond to of 57684

Yeah, I don't think it does anything for the economy. I've been guilty of buying a div player when I see it pays a nice rate and is down a few days before it goes ex-div but for me, that's mostly a trade........ I don't have to hold the stock for the whole year to get that dividend. I rather buy a stock I think will appreciate in the long run because of growth. Besides that......... stocks in an ira don't benefit any more if the divs are not taxed rather than taxed. Income is still going to be taxed when the money is withdrawn......... unless the government wants to complicate matters by making us keep track of how much was dividends in which case, I'll probably pass. TA

To: stockman_scott who wrote (15637)	1/9/2003 3:48:15 AM
From: XBrit	Read Replies (1) \| Respond to of 57684

WSJ has a must-read article on Bush's package tonight. Excerpts below. I was stunned. They're proposing to gut the capital gains tax on stocks, as well as removing tax on dividends. Unless they can attach it to a budget bill (only 51 votes needed), this whole mess has NO HOPE of getting through the Senate. None at all. online.wsj.com ========== A Look at the Fine Print Reveals Capital-Gains Cut ...What about shareholders of a company that doesn't pay dividends? They get a break, too, but only when they sell their shares. Say a share is bought for $100 and the company has $6.50 a share in fully taxed profits that year. The company will notify the shareholder of this. Then, suppose the share is sold for $110, for a $10 profit. The capital-gains tax will apply only to $3.50 of the gains ($10 minus $6.50.) Each year, a holder will be able to increase his "basis" -- the cost for figuring out his gain on shares held, for tax purposes -- by the amount of the company's taxed profits. Why this wrinkle? The point of the plan is to stop taxing corporate profits twice -- once when the company earns them and again when the shareholder gets the benefit, either as a dividend or as a capital gain. The point is not to force companies to pay dividends. Doesn't this gut the capital-gains tax? The capital-gains tax -- now a maximum of 20% -- will apply only to gains on shares that exceed a company's taxed earnings. Gains on stock of companies that haven't made profits will be subject to capital gains. But profits on shares of many other companies may escape capital-gains taxes altogether. ...Would all corporations be able to pay tax-free dividends? No. Companies that by their nature don't pay income taxes wouldn't be able to pay tax-free dividends. This includes entities such as real-estate investment trusts and many types of closely held corporations -- for example, Subchapter S corporations that operate like partnerships, passing through their profits to shareholders. Would closely held companies that are taxable be able to game the system by declaring huge dividends? That seems unlikely [ho ho ho - XB]. They would have to have earned big profits on which they paid corporate income taxes. But the Treasury hasn't yet released all the rules to prevent abuse.