Possibly you missed my post in another thread in which I provided a link to one of my favorite economics papers.You're preaching to the choir, mate, at least on the matter of the use of information.

Cheers all,on this whole dividend tax thing: your "new" dividend receipients are mainly going to come from the munis' crowd. I don't think it'll wipe out the whole munis market, but it will certainly give municipalities a much harder time to get financing. I'm not sure if it is good or bad, but I'm sure local officials are getting very anxious with this whole thing. on the firms paying (maybe) more dividends: Good because it reduces the agency problems arising from the free cash-flows situation (i.e. more money for investors, less perks). Bad because in the case where the firm's managers are doing a good job, that means less money for new investments. Back to the UN thing, please keep in mind that the US and UK have a history of lying with straight faces at the Council (remember that Kuwaiti "nurse" that was in fact the daughter of the Kuwait embassador?). Blair just half admitted that his report (the second half to be precise)presented at UN Council (supposedly containing a lot of evidence from the MI6 memos) was a copy-and-paste from a dissertation on the Iraq situation written in 1999 by a guy at a think tank by Tel-Aviv, also published five months ago by in the Middle East Review of International Affairs. Powell cited the report as evidence too. The ironic part was that the dissertation had be written in the first place to show how Iraq was now disarming... Interesting ain't it?IMHO, manicheists are the most stupid people on Earth, whatever their "color".Peace,Hiboumalin

New dividend recipients will include people who currently own stocks that pay no dividends, or stocks that would raise dividends if the tax were eliminated. Given that most households in the US own stock shares, this is not just a small group of rich people.The truly poor, who own no shares, will just have to settle for the multiplier effect that allows companies to get better equity financing and pay more wages.

Update on Sudanese civil war:Apparently, there is a evidence, now that shooting has stopped for awhile, of a Cambodian style Killing Fields. Perhaps someone can ascertain Koffi Anan's and Nelson Mandela's reactions.

To be perfectly honest I am not completely satisfied with the Bush plan. Stopping double taxation of dividends was long due and a good thing. I am not sure it's enough though. It will not make a quick impact and I am not sure will make enough impact. I can't give a quantitative proof of that, just a gut feeling. But since its the first time ever I agree even partially with Marsden, there may be something to it.

I think Zerdna is right, the old taxation system is wrong, however the last bull market managed quite well without this tax boost. I also don't think it is enough to boost the market. These combine to make it neither necessary nor sufficient.However, my understanding is that the problem is "consumer confidence", ie getting people to spend. This tax break is actually an incentive to save through equities.It seems to me that if I wanted to boost the US economy I'd give a tax break to credit card interest.

Eventually I get tired of other people's misuse of statistics. Here is the straight skinny. (Excel file)Of note from this table of 1999 tax return information:-- the top 0.16% of taxpayers (ranked by AGI) -- those with AGI>$1,000,000 -- received 19% of dividend income.-- the top 7.5% of taxpayers (ranked by AGI) -- those with AGI>$100,000 -- received 59% of dividend income.-- the bottom 48.3% of taxpayers (ranked by AGI) -- those with AGI<$25,000 -- received 9.5% of dividend income.-- the bottom 73.2% of taxpayers (ranked by AGI) -- those with AGI<$50,000 -- received 20% of dividend income.All the yakking about how more companies paying dividends and more people owning dividend paying stocks (and the yakking not yet made about how AGI is not a perfectly accurate indicator of level of wealth or even of sustainable income) not-withstanding, it should be obvious to any thinking person that an elimination of taxes on dividends would benefit the wealthiest taxpayers immensely as a group, and would not be very consequential to less-wealthy taxpayers.

What Zerdna conveniently ignores is that there is a value imparted to shareholders by the government's recognition of corporations. Maybe some of you financial genii even know what that value is. If corporate income tax rates are about the same as individual income tax rates, then eliminating taxes on dividends received by individuals would essentially be providing that value to shareholders for free (all corporate income would tend to get paid out as dividends if it were free to do so). But we know that nothing of value is really free -- who is footing the bill for the benefit of owning shares in a corporation, and how are they compensated for their service?Really, the anomally is S-corporations, and not the "double taxation" of dividends.

i don't think I ignore much. It's a shareholder's company and it's shareholders money paid for the risk they are putting their assets at. Government taxed it once, it's enough. What happens now is company has to buy its own stock to effectively "pay diviidend" to the shareholders. That artificially inflates the share price and could contribute to bubbles like we experienced. It's a bad idea in general, it's like substituting money as universal equivalent to fake money that could only buy shares of one company.The problem is not S-corp, it's unnecessary complex tax law and too many tax lawyers -- it's ridiculous that so many normal people cannot calculate their taxes. I have some hopes Bush might address that.

Marsden, I do not follow your logic. The government's recognition of corporate status, independent of the tax code, would seem to have minimal value. If the pure recognition of the US government is so valuable, why would entities incorporate in the Caymans? The value of a legal structure that allows for incorporation is not a transfer of value from non-shareholders to shareholder, as you seem to imply. It is an investment in a structure which allows for a more productive society; one which no individual member of the society has the appropriate incentive to make. As such, it is exactly the sort of activity that a government should engage in.Reducing taxation is always going to benefit most those who pay the most taxes. Under a progressive tax system, this means that reducing taxes will disproportionately benefit the rich since they pay more taxes. If one accepts that transfer payments from rich to poor will be reduced proportionate to the tax decrease, this does not seem to be a problem. If one desires to sustain transfer payments at pret-tax-cut levels, then they must be funded either by increasing tax revenues from other sources or by debt.As for the lack of stimulative effect, I do not see why that is a problem. Far from requiring more incentives to spend, American consumers are at record levels of personal debt. Savings, on the other hand, are abysmally low. The marginal savings rate for households is near zero or negative. If one accepts that the structural reforms gaines from eliminating taxation of dividends are desirable, then the American public should suck it up and take a little drop in consumption in a more manly fashion.

QuoteOriginally posted by: MobPsychoYou're just darn angry that anybody is making money, huh?No. But I do like stability and sustainability.