Dividend payouts can either be used as cash for spending or as re-investment funds for investors, but corporations are wary to give it out because of taxes
Back to Home Page
What has been done so far
So far, the dividend tax rate has been slightly rolled down by 5% increments, but that is not enough to stimulate the economy and truly encourage dividend distribution. Still, major U.S. companies such as SBC Communications (A 35% increase) and Citigroup (A 75% increase) have either raised or started to distribute dividends as a result of this legislation. Microsoft, which had never issued dividends at all until January 2003, made a doubled payout in September 2003, much to the delight of its shareholders, who have not been encouraged by a lack of improvement in prices.
What needs to be done
The minimal dividend cut is not sufficient for America to enjoy the broad macroeconomic benefits. The willingness of companies to start making overtures even in the face of minimal cuts is just a taste of things to come. Contact your Senator or Congressperson and encourage them to push for more legislation which aims to diminish the dividend tax at both the corporate level and the personal level. You, the good citizen, are the one who benefits in the end.
Gleckman, Howard. The Dividend Tax Cut: Prepare for a Paler Version. Business Week. [http://www.businessweek.com/magazine/content/03_18/b3831045.htm]
King, John. Bush to seek $600 billion economic boost. CNN MONEY. [http://www.cnn.com/2003/ALLPOLITICS/01/06/economic.stimulus/]
Mann, Bill. The Truth About the Dividend Tax. The Motley Fool. [http://www.fool.com/portfolios/rulemaker/2003/rulemaker030108.htm]
Michael, Norbert. Who Really Benefits from Dividend Tax Relief?. The Heritage Foundation. [http://www.heritage.org/Research/Taxes/CDA03-02.cfm]
Reynolds, Allan. Stalked by Fears of Dividend Tax Cuts. The Cato Institute. [http://www.cato.org/dailys/01-03-03.html]
Weinberg, Ari. Making The Dividend Tax Cut Work. Forbes. [http://www.forbes.com/home/2003/11/12/cx_aw_1112dividends.html]