Thursday, October 14, 2004

Bad Tax Cut! Bad Tax Cut!

Hie thee hence. The Big Picture opines that the cut in the dividend tax moves money away from job creation. The could be a Kerry opportunity to get a quick economic fix in place next year.
"The new dividend tax rule has created an incentive for corporations to transfer working capital outside of the firm, and into the hands of shareholders. That has reduced the pool of capital that otherwise would be used to build new plants, make more capital improvements, and yes, hire new workers.

Even worse, my calculations show that more than half of all dividend-paying stocks are held in nontaxable accounts -- pension funds, endowments, foreign investors, and retirement accounts. So these increased dividend payouts simply sit in these tax-advantaged accounts, in some cases, for decades, and there is no multiplier effect, because the money is neither spent nor reinvested in the broader economy. So instead of stimulating the economy, these monies lay fallow.'"

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