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To: Lizzie Tudor who wrote (157494)	5/29/2003 7:47:57 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 164684

the problem with dividend tax cuts, is there isn't any reason for doing them except to help the rich. How 'bout the simple truth that applying income tax to the same dollar twice, at best, makes no economic sense. It creates economic incentives for companies to favor debt over equity and open market repurchases or hoarding of cash over distribution of surplus cash back to shareholders to spend or reinvest in other businesses in need of capital. Even many growth companies generate huge surpluses of cash they can't possibly reinvest in their businesses. Think, MSFT, DELL, CSCO and many more. Any reallocation of investment dollars from non-dividend paying to dividend paying companies will be a short term, temporary effect until valuations adjust to the risk and cash-flow characteristics of the investments. It seems you are too caught up in the democratic class warfare rhetoric and uniquely silly valley view of economics to see the truth.

To: Lizzie Tudor who wrote (157494)	5/29/2003 8:31:15 PM
From: Victor Lazlo	Read Replies (1) \| Respond to of 164684

<<the problem with dividend tax cuts, is there isn't any reason for doing them except to help the rich. >> So you'd be in favor of a 100% tax on dividends? Why tax the same money twice? Dividends are already after- tax dollars, even before they ever become dividends. If you want to tax the rich, just increase income taxes for the high brackets. Double taxation of corporate income is bad for the economy. Besides rich people, such as Ross Perot, are big on muni bonds and gov bonds. A few years ago Ross Perots single biggest stash was in bonds issued by the metro Boston subway system. Maybe we should make 'rich' people pay their health insuranc epremiums with after tax money. Wouldn't that raise even more money for our wise and prudent politicians to 'invest' in America? <<There aren't many tax cuts like dividend tax cuts, its almost the most useless tax cut one can think of as far as the stimulative effect. >> I think the didvidend tax itself is useless. I think you like the tax becuase you dont have to pay it! <<Stocks that pay dividends are those that are favored by investors looking for safety and diversification. So that excludes the young working folks who we know prefer growth.>> So young working folks dont want safety or diversification? Any balanced fund will have blue chip div-paying stocks in it. And balanced funds a re big with young people who dont have a lot of surplus to risk on agressive growth funds. I disagree with your idea that div-paying stocks drain capital from growth companies. What is draining capital away from growth companies is the sad legacy of acctg fraud and outright bubble companies that the mkt is trying to get passed these days. Tons of money is still sitting in bonds and mon mkts due to lack of trust in equities. And that fruad and bubble mania was due to frauds posing as growth co's, not div-paying co's.