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Tech World Not Impressed By Bush Plan
from the a-big-shrug dept
Well, it seems that the technology world is almost universally unimpressed by Bush's plan to stop taxing dividends. The articles are appearing everywhere, saying that the plan is "no help at all", that it "falls flat" for technology firms, and even one that calls it "troublesome" for tech firms. The general consensus seems to be that this move helps big investors in old-time companies, and does little to nothing to help tech companies - who still need to use their cash to invest in future growth.
Reader Comments
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Wood / Trees
What inane comments. The whole point of this move is to let GWB's rich oil friends become even richer. It is not intended to help anyone else. Why would you think this was the case?
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This helps everyone not just Bush's buddies
When I first had some money to invest I made the conscious descision NOT to invest in tech companies. I did this because my grandfather told me that dividends didn't lie. Essentially he never invested in a company who didn't pay him back. He didn't trust companies that didn't pay dividends and now I don't blame him. Dividends are a sign of profit. Why doesn't M$ offer dividends? They have $40 billion! Most of the companies I invest in have a 2% or more yield, this yield makes a bear market tolerable. And that this yield won't be taxed definately persuades me to invest more in dividend producing stocks. Finally if tech companies started paying out dividends then maybe they'd stop investing money in ventures that are doomed to fail.
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Re: This helps everyone not just Bush's buddies
While dividends definitely do make sense for stable companies in mature markets, they don't make sense for companies in growing markets where investment is needed.
The investments in "failures" are all part of the process of risk taking that creates the huge successes that make the technology industry able to innovate the way that it does. Giving incentives to people to rewards mature markets at the expense of innovation is a dangerou long-term strategy.
You're welcome to invest your money however you want, but don't assume that just because your grandfather said something, it applies to all companies in all industries.
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Re: This helps everyone not just Bush's buddies
I think AC's onto something. Stocks used to be priced based on the rate of return they paid through dividends. With tax disincentives resulting if few companies paying dividends, stock prices have lost touch with reality, resulting in the boom/bust of the last several years. I'd like to see the so-called double taxation of dividends eliminated if for no other reason than to return to the expectation that profitable companies should return some of that profit to shareholders through regular dividends.
However, what bothers me about this proposal is that it doesn't apply to stocks held in tax-deferred 401(k) and IRA accounts, which are probably what most people have. If that's accurate, then it's completely dishonest for a supporter of this to quote figures like 'this will affect 75 million stockholders in the US' without noting that the change wouldn't make any difference for most of them.
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Re: This helps everyone not just Bush's buddies
It doesn't apply to stocks in tax deferred vehicles because their dividends aren't taxed. Dividends are reinvested and you don't pay taxes on them because they're tax deferred--in the end when you take the money out and its' taxed as income, indirectly the growth due to the reinvested dividends is taxed, but directly it isn't. Though as you said, it's dishonest to say that this would affect stockholders who only have tax-deferred holdings if they're included in the 75 million.
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