More dividends

More dividends

A couple of weeks ago, we had a lively discussion in the comments box over the justification for President Bush’s tax cuts for dividends. Good arguments on both sides.

I just saw new data this morning that I think adds to the debate. From the Tax Foundation, information on who gets dividends:

    Despite widespread belief to the contrary, dividend income was earned by taxpayers across the income spectrum. In fact, of all taxpayers that claimed some dividend income in 2000, nearly half (45.8 percent) earned less than $50,000 in adjusted gross income (which includes dividends). [See Figure below]. Moreover, 63.8 percent of those taxpayers claiming dividends earned less than $50,000 in just wages and salaries.

Okay, but how many of those people under $50,000 were getting a substantial part of their income from dividends, and how many were making something like $100 or less per year? I still think the dividend tax cut is a good idea as an economic stimulus, but I prefer to have complete information at hand.

An op-ed writer for the local Salem Evening News, Robert Kelly makes a good point about the divident tax cut, too. He notes that since the dividend is already taxed as income for the corporation, then the disbursement of that income to the owners of the corporation (the shareholders) should not be double-taxed. The rest of the column is good, too.

Written by
Domenico Bettinelli