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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: kech who wrote (31051)	1/12/2003 4:21:02 PM
From: Jim Mullens	Respond to of 196562

Tom, Regarding “The Tax Plan” and Qualcomm, my random thoughts. I agree that it is a step in the right direction and with your statement>>>”It is a complicated plan. No question. But that complication is oriented toward achieving some improvements in corporate governance and tax avoidance that might not happen with a either a zero corporate income tax or a zero corporate tax on dividends.” The elimination of taxes on Qualcomm (for Ramsey) dividends when & if they ever give them probably won’t directly benefit me tax wise as unfortunately (and fortunately) most of my Qualcomm is in IRAs (trad and Roth). Indirectly I should benefit as the plan, as I understand it, also considers income not paid out as a dividend as a “deemed dividend” which would be added to the cost basis of the share price for capital gains tax calculation purposes. This should make holding stocks more attractive and therefore increase the stock price accordingly. Critics say this (dividend related) is not an economic stimulus, however I strongly disagree. It should result in higher stock prices, and when the market is performing well folks are inclined to cash in some of their gains, spend some and pay capital gains taxes on some. The economy benefits as well as all levels of government with increased tax revenue. The prior administration and their talking heads continue to point to the current administration’s deficit, yet I bet a lot of their surplus came from a booming stock market, which provided capital gains tax revenue and a lot of ROTH conversions which provided tax revenue. It is “interesting” that outside of Greenspan’s early comments re: “irrational exuberation”, not too much was done by Treasury Secy Rubin or others to repress the bubble. That bubble turned out to be a god send to the treasury coffers. FWIW, you might like this definition of “middle class”- house.gov Adjusted gross incomes above $313,469 paid 37.42% of all income taxes in 2000. To keep it simple (since I can't find more detailed data), let's call them the top third. These are the "upper class" tax payers. AGI above $92,144 paid 67.33% of all income taxes in 2000. This means the group from $92,144 to $313,469 is the beloved middle third (class) of tax payers. That means that tax filers with AGI below $92,144 paid only one third of all income taxes paid in 2000. Call these poor folks the low class ;) What could be simpler than that ? Any tax cut that does not benefit filers with AGI above $92,144 absolutely cannot be called a middle class tax cut. Why use a term like "middle class" to refer to middle income when it's not income we're dealing with, but taxes ?

To: kech who wrote (31051)	1/12/2003 11:28:15 PM
From: engineer	Read Replies (1) \| Respond to of 196562

of couse all these companies who fared thru this big recession with out having debt and without declaring bankruptcy (thus rendering the shareholders value as ZERO), could have paid all the retained cash out in divdends and been a victim to the effects of a major downturn. Of course all you could ahve predicted that in 1999 and asked that they pay dividends then. I do not think it is bad thing for them to retain cash to make major moves. 200 Million into Reliance? which will open a new market? oh, no pay it to the shreholder and then ask them to buy some mroe shares to fund a move like that...how about taking out a $200M laon so that they could do it, after paying out all retained cash to the shareholders? I would favor something like a penny dividend per share per year, but not anything which depletes free cash in the corporation.

To: kech who wrote (31051)	1/13/2003 11:53:09 AM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 196562

Tom, regarding the tax plan impact on QCOM, it would do a very imperfect and inefficient job. Those individuals or institutions that own the stock either in deferred tax or tax-free accounts would not really benefit, and that's quite a large number of shares. As to encouraging a company to pay dividends and encouraging the purchase of stock rather than options by company employees, there are some complications. Whether a company pays actual dividends or "deemed" dividends (i.e., retained earnings to be invested in new projects), it is in the company's interest to keep costs down, including the added costs for expensing options when issued. The tax plan ENCOURAGES companies NOT to expense options, in order to create the type of net earnings that would lead to tax free dividends or similar cost basis adjustments for capital gains purposes. A company should have the right to decide on whether to pay dividends, invest more in growth, or, a third alternative you didn't mention, buy back shares. The least complicated way of doing this, and the way that distorts the whole picture less, is to lower corporate taxes. Even The Economist agrees with this approach over the cut in taxes on dividends. Given that large portions of dividends paid out by other companies are untaxed right now, the proposal is simply inefficient. Finally, the proposal would DISCOURAGE individual investors from owning interest bearing securities, like corporate bonds, because this income would remain taxable. This would reduce the market for bonds of all types, including municipal bonds, and thereby increase the cost of borrowing for corporations AND municipalities. When you look at all these distortions, you begin to see why the proposal is half baked. Art