 |
||||||||
|
1/08/2003 02:05:00 AM | Jared Alessandroni Shrunken Head Jon - really, I don't normally complain about getting too much head, but in this case... Dividends Econ 1 sans Power Point: Dividends are payment on stocks. Essentially, a company gets money from investors to do stuff. When they've done the stuff, they don't just give the money back to the investors [that would be a loan]. They need working capital, right? Of course right. So, they pay dividends. We knew that. Right. Anyway, the tax on these is similar to the tax on income. It's as if your work was to invest, and this was your payment, thus, it's income on top of the value of your stock. Like interest on a money tree. Companies are quite motivated to pay dividends. The stability of their company depends on the happiness of their stockholders. Their complaint is that even though their stockholders already pay taxes on the profit of their company [essentially, the value of their stocks], they are then forced to pay again for the income of the dividends. If they no longer had to pay this, it is argued, investors would be more likely to invest, companies would be more stable, and the economy would grow. What is most at issue here is the validity of that assumption. Fairness in an ideological sense is irrelevant in many ways because - many people on both sides would argue - what matters is that the economy improves and that we end up better off than we started. Herein lies the problem. How do we define we? In a very real and literal sense, this causal relation is true. If we lower or take away the dividend tax, more people will invest. Trickle-down economics, as Regan could tell you if he could remember, follows with the idea that with more people investing, the economy becomes more vibrant, and the little guy [eventually] wins. This of course depends on what people invest in, and, and this is the clincher other market factors. As Papa Bush realized, the war, a stagnant auto industry, and competition from Asia made shortwork of his predecessor's well-laid plans. No matter how much you encourage the rich to invest and business to expand, history shows us, other factors tend to be much more potent. Clinton, with some business-friendly policy and a lot of people-friendly policy, presided over a great amount of prosperity that had more to do with emerging technologies, peace, and international market factors than any policy decision Adam Smith could have wanked to. If we define the other we, on the other hand, if we say that the average Joe, the welfare mom, and the spotted owl matter, then cutting taxes for the rich looks ludicrous. Any economist will tell you that the trickiest trick in the book is to give a poor person ten dollars. You give a rich person 100, and they'll spend 80, save 20. Why? They can, and saving means solidarity. Most people would save if they could. But, you want to seed the economy, and feed fucking starving people you put the money in the hands of the people who need it. Only a functionally illiterate cowboy would think that it's better to get back $80 per $100, when you could get $10 for $10. Only a pathetic imbecile with a daddy-complex would say the value of capital investment is somehow higher than the value of pure consumption. As for the morals, well, that's a different lesson, kiddies. perma link |
| 0 comments
0 Comments: |
Dartmouth The Free Press Alums for Social Change The Green Magazine The Dartmouth Dartmouth Observer Dartmouth Review Dartlog Inner Office The Little Green Blog Welton Chang's Blog Vox in Sox MN Publius (Matthew Martin) Netblitz Dartmouth Official News Other Blogs Ampersand Atrios Arts & Letters Altercation Body and Soul Blog For America Brad DeLong Brad Plumer CalPundit Campus Nonsense Clarksphere Crooked Timber Cursor Daily Kos Dean Nation Dan Drezner The Front Line Instapundit Interesting Times Is That Legal? Talking Points Memo Lady-Likely Lawrence Lessig Lean Left Left2Right Legal Theory Matthew Yglesias Ms. Musings MWO Nathan Newman New Republic's &c. Not Geniuses Ornicus Oxblog Pandagon Political State Report Political Theory Daily Review Queer Day Roger Ailes SCOTUS blog Talk Left TAPPED Tacitus This Modern World Tough Democrat Untelevised Volokh Conspiracy Washington Note X. & Overboard Magazines, Newspapers and Journals Boston Globe Ideas Boston Review Chronicle of Higher Education Common Dreams Dissent In These Times Mother Jones New York Review of Books New York Times Salon Slate The American Prospect The Nation The New Republic The Progressive Tikkun Tom Paine Village Voice Washington Monthly Capitol Hill Media ABC's The Note American Journalism Review Columbia Journalism Review CQ Daily Howler Donkey Rising The Hill Medianews National Journal NJ Hotline NJ Wake-up call NJ Early Bird NJ Weekly Political Wire Roll Call Spinsanity Search Search the DFP  |
|||||||
The opinions expressed here are not necessarily those of Dartmouth College or the Dartmouth Free Press.