Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : NOTES -- Ignore unavailable to you. Want to Upgrade?

To: Didi who wrote (2424)	5/21/2003 9:09:38 AM
From: Terry Whitman	Read Replies (1) \| Respond to of 2505

Consumer sentiment still improving- cm1.prusec.com Have to disagree w/ Mr. Buffet on the div. tax cut. I'm certainly not rich, by most standards, and I will save a bundle with tax-free dividends. I will no doubt 'stimulate the economy' with it too, by re-investing much of it, and spending the rest.

To: Didi who wrote (2424)	5/21/2003 11:29:27 AM
From: TimF	1 Recommendation Read Replies (2) \| Respond to of 2505

Mr. Buffett's article doesn't directly deal with with the specific issue I raised. Its only about the dividend tax cut. Also its about the original proposal which was to eliminate taxes on dividends when the company is paying corporate income taxes (you would still pay taxes if a company that is losing money and thus paying no taxes decided to pay dividends). The version the Senate passed only reduces these taxes. But to deal directly with Buffett's point. If Buffett owns 31% of Bershire, and Berkshire pays taxes he is effectively paying 31% of those taxes. the Senate voted last week to supply major aid to the rich in their pursuit of even greater wealth. The Senate did no such thing. Lowering tax rates is not providing aid or a subsidy. The money is still flowing from the rich to the government not the other way around. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party. Before this break and after this break the rich will pay a disproportionate share of income taxes. Perhaps they should but that is another argument. My point is merely that they do. Supporters of making dividends tax-free like to paint critics as promoters of class warfare. The fact is, however, that their proposal promotes class welfare. For my class. Nonsense. His class (depending on exactly how you define it) is still paying most of the taxes. However if he thinks he isn't paying enough it is possible to send a check to the Federal government. Have stats, tables and/or charts to back your statement? The article I linked to included a chart and also information in text. Some more links taxfoundation.org townhall.com (Note the chart in this article contains data from another article that this one criticizes but even this original article shows the rich paying a little more. The text of the article shows how its really more then a little) dailyhowler.com Here is an article that is arguing for more "progessive" taxation (at least it argues for making the social security tax "progressive") and argues that conservatives overstate how the rich pay more, but its data still show that even including social security taxes the rich still pay a larger percent of their income in federal taxes. Its data is not completely current (some of it stops at 1988 and some at 1992) but the basic fact hasn't change. The rich pay a higher percent of their income in taxes. korpios.org There is a lot of data on this CBO site including Total Effective Federal Tax Rate Under 2000 Law (Note this is total tax rate not just income tax rate, the effective income tax rate for the poor is negative, and that doesn't include welfare and other benefits as they are not taxes, it would be more negative if you included them) Lowest Quintile 5.3 Second Quintile 12.8 Middle Quintile 16.7 Fourth Quintile 20.0 Highest Quintile 27.4 cbo.gov " Another source of confusion about tax cuts stems from a misunderstanding of who actually pays the lion's share of income taxes under our federal system. If those in the top income brackets also pay the most in taxes, it makes sense that any tax cut is going to benefit them disproportionately. It just so happens that the top 1 percent of taxpayers pay 35 percent of all income taxes paid. The top 20 percent of all taxpayers pay 83 percent of all taxes. And the top 50 percent pay almost 96 percent of all federal income taxes." mackinac.org "In 1975, for instance, the top 1 percent of taxpayers, those earning more than $59,338, paid 18.7 percent of all federal income taxes, up from 17.7 percent 5 years earlier. The top half of taxpayers paid 92.9 percent of all income taxes in 1975, meaning that the bottom 50 percent paid just 7.1 percent. According to the most recent figures, released by the Joint Economic Committee of Congress, the share of total federal income taxes paid by the top 1 percent of taxpayers has doubled since 1975. In 1999, they paid 36.2 percent of income taxes versus 18.7 percent in 1975. For perspective, the top 1 percent of taxpayers reported just 19.5 percent of adjusted gross income; thus their share of the tax burden exceeded their income share by almost 17 percentage points. For the top 5 percent, the spread was more than 21 percentage points. By contrast, for those in the bottom 50 percent, the difference between the percentage of total taxes and total income was minus 9.25 percent -- that is, their income share greatly exceeded their tax share. ncpa.org

To: Didi who wrote (2424)	5/22/2003 11:27:01 AM
From: David Lawrence	Read Replies (2) \| Respond to of 2505

"But I was luckier in that I came wired at birth with a talent for capital allocation..." Well, his wires are crossed. Dividends are either a return of paid-in-capital or retained earnings on which taxes have already been paid. It's double taxation to tax them again at the individual level. It's not a case of rich or poor, nor is it a case of economic stimulus. It's a case of correcting an inequity in the tax law. Period. Perhaps he has an ulterior motive? Is he or any of his companies a major holder of tax-free municipal bonds? Tax free munis have been unfairly subsidised by the unfair taxes placed on corporate dividends for decades. Now, they will have to compete on a more level field for the same investment dollars. Municipal bond issuers will have to pay higher rates to compete for those dollars. And, of course, they'll have to raise EVERYONE's taxes or cut spending in order to service a higher debt cost. And, currently outstanding bonds will decrease in value. THAT is the real impact of exempting dividends from tax, but "Mr. Wired For Capital Allocation" didn't even think it worthy of mention? Perhaps that would reveal his true motivations for opposing the tax cut? Of course, this could all be avoided by making dividends a tax-deductible expense at the corporate level, and continuing to take them at the individual level. But it wouldn't be politically correct to give a perceived tax break to "greedy" corporate America, so instead we'll shoot the tax-free bond market in both feet. He's a smart man... smarter than those who take his words at face value.