Oh? You think? Tell you what, next time you’re down at Mickey D’s, ask the guy behind the counter about his 401K. Or drop down to the unemployment office, do a quick survey. Keep the car running, these people can be testy.
And boy, $300 whole bucks! Really! Gosh-a-rootie! And only $260 billion for the dividend clipping class! Boy, those “lucky duckies” are making out pretty good, huh!
Yeeee-haw, Maw! Warm up the skillet, we’re gonna have hamburger in our Helper tonight!
I believe (although Scylla can correct me if I’m wrong) that the supposed “inequity” that is being referred to is the “double taxation” of dividends. [Bush et al. found that “double taxation” argument suckered people once with the estate tax, so why not fool 'em twice!]
The rebate, you may recall, was a small part of a tax cut plan whose total distributional impact has been well-studied. (See, for example the Citizens for Tax Justice web site. As far as I know, their numbers have never been challenged or, to paraphrase Paul Krugman, the Administration has attacked the CTJ analysis as being deficient but then when asked to provide their own numbers [e.g., of the fraction of the cuts that go to the top 1%], they don’t…They just go and answer another question that they like better.)
I’m always at a loss as to how to treat this kind of thing. Simple errors occur of course, and those need to be corrected politely, but what do you do with this?
It makes me wince, to see this thing.
MCD has a great 401k plan with outstanding participation. Chances are if the guy behind the counter isn’t a student there for the textbook deal and the flexible hours, he’s a participant.
IIRC MCD has a matching contribution plan as well as a 15% discount on purchases of MCD stock within the plan, so there are big incentives to participate.
MCDs performance has been poor recently and they pay about a 1.5% dividend.
Over 70% of the MCD 401k plan is held in MCD stock.
In other words, you could hardly have chosen a more contradictory example. Damn straight he cares!
As do the employees of Lowes, Home Depot, Walmart, Tricon Global (Pizza Hut, Taco Bell, KFC,) target, and Millions of other working class employees, whom you discount in your blithe sarcastic ignorance.
I don’t even know where to begin with this abortion. It’s not $300 vs. $260 billion, and of course its not limited to class, as stocks are held across a very wide spectrum of society in other words it’s completely wrong, too.
and look at the last post:
Is there even the hint of debatable argument, or cogent thought there? What is the contribution? What forwards the discussion?
If you just want to be a jerk why don’t you go play in the pit or something?
Well, excuzes mois! But isnt this thread about dishonesty in the rhetoric as to the tax cut. Yes, I do believe it is. Unless I’m very much misinformed. Do advise, won’t you, if I’ve misunderstood?
Now then, if that is the case, wouldn’t a lengthy discussion as to economic philosophy be more of a hi-jack? Not to say I havent done my share. But my comments that so attract your scorn are precisely about that. Let me simplify: if Mr. Bush had used any of the arguments that you presented, I would have regarded that at least as being a more honest, if equally repugnant, attempt to pee on my shoes and tell me its raining.
He did not, as you well know. He presented his case with as much progressive spin as he could muster, calling forth images of kindly old folks frugally clipping thier coupons and tucking them away in the cookie jar for Xmas gifts for thier grandchildren.
He stayed as far away from the brutal facts of the measure as he could without provoking outright guffaws.
In my estimation, a critique of Mr. Bush’s rhetoric in his presentation goes to the very heart of the thread. If you cannot detect a cogent thought, I suggest the failing is not mine.
As always, I thank you again for your gratuitous insult in your final sentence. A recovering Texan rarely has an opportunity to feel decorous, but next to you, I am the very soul of gentility.
You just can’t help it, can you, poor fellow?
When one wants to deny reality, one resorts to statements like “stocks are held across a very wide spectrum of society” rather than actually looking at the distribution of how they are held across society. The numbers about what percentage of this $260 will go to the top earners is out there…And, needless to say, it is very high.
jshore:
They are out there?
Well, than by all means please produce them.
It is my understanding that the distribution of stock ownership would suggest otherwise. I was under the impressions that institutions investors such as Insurance Companies and defined benefit plans held by far the largest percentage of equity assets, followed by mutual fund assets in 401ks and then mutual funds in retail hands, then bringin up the rear were individual investors such as the wealthy.
No, it’s completely right. Or are you unaware that stocks held in a 401K are already tax-exempt and this cannot benefit from this tax cut?
Only the very wealth (those holding a significant stock portfolio OUTSIDE THEIR 401K) can benefit.
jshore:
and “but the wealthy are beneffiting…” isn’t an objection. Wealthy people are allowed to benefit from things. There’s nothing wrong with it.
An inequity is an inequity. I’ve given you three reasons for the repeal of the tax.
“wealthy people making money,” isn’t an objection. It’s life.
tejota:
No. I am completely aware of that fact.
Are you aware that a single A rated 30 year tax-free municipal bond only pays about 4%?
Do you know that Phillip Morris currently pays about 6.24%?
Now, assuming the tax on that dividend were removed, and Phillip Morris becomes the “Marlboro Muni,” what would be the taxable equivalent yield of it’s dividend to an entity with say a 38% marginal tax-bracket?
Do you think that would make Phillip Morris an extraordinarily attractive investment to tax-payers and institutions?
What happens to investments when they become extraordinarily attractive?
Hopefully you said “they go up.” So, assuming you said that, what happens to the guy with the 401k when all the stocks that he has in his plan start going up?
Well yes, but you haven’t justified any of them very well:
(1) You’ve claimed this “double taxation” inequity but we have pointed out that the fact that this phenomenon is: (a) Overstated, given the small amount of money many businesses actually pay on earnings, the small fraction of this that then go to dividends, and then only a fraction of these dividends are actually in taxable accounts. (b) Just rhetoric anyway since when you follow a stream of money in the economy it is often taxed several times.
(2) Is boosting the market really the role of the federal government? The market will recover on its own once the economy gets back on track. I’d prefer to help Main Strett; Wall Street can take care of itself.
(3) But we’ve argued that there is no reason to believe that this is the best way (or even one of the better ways) to help the economy.
By the way, here is a column by Paul Krugman explaining the horrendous amount of bureaucracy that is going to be generated with this new dividends taxation scheme.
I’m glad you asked since up to this point, I had only heard brief allusions to the numbers and your question has prompted me to find out more of the details. Here is the analysis from Citizens for Tax Justice:
And here are some thoughts from them on this issue of “double taxation”:
Many, huh? Can you define that? What is the initial corporate tax rate on earnings? What things can the do to get that rate reduced? What is the average marginal tax rate paid on earnings by a fortune 500 company?
If that rate is unfair, than your logical would be to raise that rate instead of taxing it again, wouldn’t it?
Really? What fractions, and how are those fractions likely to change if the tax is repealed?
I can’t recall any other circumstance where a dollar is the subject of Federal income tax twice without it having changed ownership or been used as consideration in a transaction.
That’s because there is no other circumstance. Dividends are the only time a dollar gets taxed twice with no change in beneficial ownership.
Ummm. Yes. It is. The role the government does best IMO is attemting to manage the cyclical nature of the economy to the benefit of its citizens. The market being a leading indicator, what you say about the market following the economy is absurd.
That’s a silly argument. Arguing it doesn’t mean anything.
I’m not registered at the NYT, but I’m sure I know what that lying bitch Krugman is suggesting. He’s full of shit, as usual.
We’ve been handling REITS, GNMAs, Master Limited Partnerships, CMOs and Treasuries just fine.
I think we can handle tax-free dividends just fine. It’s simply an inverted REIT with the single taxation on the corporate side.
As for the IRAs and retirement plans there’s a couple of different ways it can be handled and we are currently handling investments with similar attributes as to what is being suggested just fine.
jshore:
That last link crashed both IE and Netscape’s latest versions for me.
I would have to see the data on the first before I would accept it, and quite frankly, I’m not inclined to since your second quote is and egregious falsehood.
No entity is under any kind of requirement to pay more taxes than it owes. If a corporation can advantageously earn or is entitled to to exemptions than it is foolish indeed not to take them. Despite the false reasoning of that quote, the final marginal tax rate imposed on a corporation does not mean that the remainder has not been taxed.
If that final marginal tax rate is too low than it should be raised. It is asinine to suggest that another tax structure entirely should be imposed on those monies.
The whole argument is incredibly stupid. By that same reasoning it would be reasonable and fair to repeal all taxes on the wealthy and simply tax the poor as much as we need. I mean after all, those are just the same dollars whether they are held in the hands of the wealthy or the poor, aren’t they? And those same dollars get taxed many times don’t they? And, it doesn’t matter who’s holding them when they’re taxing them, does it?
WORST CITE EVER!
By the way, the Center for Budget and Policy Priorities is having a field day with Bush’s tax proposals. Here are links to some of their analysis:
http://www.cbpp.org/1-9-03tax.htm
http://www.cbpp.org/1-7-03tax2.htm
http://www.cbpp.org/1-13-03tax.htm
http://www.cbpp.org/1-10-03tax.htm
One of the funnest parts of the analysis is the dissection of how misleading the claim of an average tax cut of $1083 is:
But, hey, who am I to complain? I would have gotten my $1000 in year 2000 from the dividend tax break alone. It’s fun to be well off during the Bush Administration! 
jshore:
And, I don’t see what the issue is with the last part. They are not saying that Bush’s figures are innacurate, are they?
They’re just breaking it down into quintiles and taking the average of the quintiles one by one.
These are simply different views of the same thing.
A tax cut generally produces a larger dollar amount of savings to those who are paying larger dollar amounts of taxes. Hardly an enlightening piece of information.
For example, a 5% tax cut would only save 5 bucks to somebody who paid $100 in taxes, yet it would save $50,000 for somebody who paid a million.
And again…
WEALTHY PEOPLE BENEFITTING IS NOT AN ARGUMENT!!!
Well, I may be missing the distinction here but the earnings are being taxed and then, if the company chooses to distribute them as dividends they are taxed further (in the not so likely event that they really were taxed the first time).
Well, it is free and you might learn something. If I can stand to read the WSJ editorial page everyday, surely you can read a Krugman column now and then.
It’s a PDF fileYou must not have Adobe Acrobat Reader set up correctly on your machine.
Well, as I have pointed out before, I am somewhat agnostic on the idea of a dividend tax if it is coupled to other taxes such that it is not just a windfall for the wealthy. As near as I can recall, Bush hasn’t proposed overhauling the corporate tax structure in this way. In fact, after 9/11, he tried to get more tax loopholes on corporate taxes although eventually was forced to largely back off of it.
Noone said it doesn’t matter who is holding them when they are taxed. And, unlike Bush, I don’t try to justify not taxing the poor more because of some appeal to some made-up concept like “double taxation”. I try to explain why I don’t think this is very equitable. (It also wouldn’t raise shit for revenue because the poor are kinda lacking in the money department.)
Yes, but one view looks a whole lot better than the other when you are trying to deceive the broader public into believing this tax cut is beneficial for them!
By the way, from what you said, my impression is that you don’t know what Krugman is suggesting. I don’t think I could do it justice without quoting practically the whole article, so I suggest you check it out yourself.
By the way, I heard essentially a very similar story about the complications, from someone who sounded much less political than Krugman is, on NPR last night.
You can listen to the NPR (“Fresh Air”) segment here: