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Technology Stocks : The New QUALCOMM - Coming Into Buy Range -- Ignore unavailable to you. Want to Upgrade?

To: SirWalterRalegh who wrote (5847)	2/10/2010 10:53:35 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 9129

Good chance the 15% tax will become ~30% next year. If that's the case, then all the more reason to increase the dividend now, before a tax increase, even if it were in the form of a one-time extra dividend. However, it's a bit simplistic to characterize the current "qualified" dividend tax preference as 15%, just as it is simplistic to consider it reverting to about 30% next year. Fact is, the current 15% rate is the maximum rate, and it's actually less than that for taxpayers in lower brackets. The 30% rate means simply that dividends would be taxed as ordinary income, the way they were taxed before 1986. The tax rate would vary between 0 and about 35 percent, depending on adjusted gross income. My own view is that the current dividend tax preference (not available for certain kinds of dividends, such as those from real estate investment trusts) places capital gains at a disadvantage, especially long term capital gains. Put another way, the current system favors slower growth, high dividend stocks over faster growth, low or no dividend stocks, of which QCOM is an example. A better solution would be to tax both capital gains and dividends as ordinary income, with capital gains indexed to inflation, and short term capital gains (e.g., trading profits taken in less than 30 days) made subject to a surtax of 1 to 2 percent. This would shift incentives from short term trading to long term investing, which is, after all, the main purpose of investing. Art