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http://online.wsj.com/article/SB10001424052970204880404577225493025537660.html?mod=WSJ_hp_LEFTTopStories

REVIEW & OUTLOOK FEBRUARY 22, 2012 Obama's Dividend Assault
A plan to triple the tax rate would hurt all shareholders.
President Obama's 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.

Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.

Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.

Welp, gotta pay off that deficit somehow...

I'm sure the skyrocketing corporate profits are going to feel terrible that their corrupt and shady accounting has to be put into overdrive to avoid paying any taxes at all even more. How many major corporations in the U.S. don't pay any of these taxes at all, let alone44% again? How big was that number?

http://www.huffingtonpost.com/2012/02/03/corporate-profits-tax_n_1253007.html
I'm sure they'll be ok. Hey, maybe they'll take some of the profit margin and actually pay their workers a livable wage! Yeah, probably not.

ShumaGorath wrote:I'm sure the skyrocketing corporate profits are going to feel terrible that their corrupt and shady accounting has to be put into overdrive to avoid paying any taxes at all even more. How many major corporations in the U.S. don't pay any of these taxes at all, let alone44% again? How big was that number?

http://www.huffingtonpost.com/2012/02/03/corporate-profits-tax_n_1253007.html
I'm sure they'll be ok. Hey, maybe they'll take some of the profit margin and actually pay their workers a livable wage! Yeah, probably not.

Pretty much this

Actually some of our most successful times in US history had high ttax rates.

ShumaGorath wrote:I'm sure the skyrocketing corporate profits are going to feel terrible that their corrupt and shady accounting has to be put into overdrive to avoid paying any taxes at all even more. How many major corporations in the U.S. don't pay any of these taxes at all, let alone44% again? How big was that number?

http://www.huffingtonpost.com/2012/02/03/corporate-profits-tax_n_1253007.html
I'm sure they'll be ok. Hey, maybe they'll take some of the profit margin and actually pay their workers a livable wage! Yeah, probably not.

You know most retirees focus on stocks with dividend income right? What do you have against old people Shuma?

Old people hoard tiny dogs and get cranky.

Frazzled wrote:

ShumaGorath wrote:I'm sure the skyrocketing corporate profits are going to feel terrible that their corrupt and shady accounting has to be put into overdrive to avoid paying any taxes at all even more. How many major corporations in the U.S. don't pay any of these taxes at all, let alone44% again? How big was that number?

http://www.huffingtonpost.com/2012/02/03/corporate-profits-tax_n_1253007.html
I'm sure they'll be ok. Hey, maybe they'll take some of the profit margin and actually pay their workers a livable wage! Yeah, probably not.

You know most retirees focus on stocks with dividend income right? What do you have against old people Shuma?

The entitlement crisis.

d-usa wrote:Old people hoard tiny dogs and get cranky.

This is a true statement.

"what do you mean I have too many dogs? They can all fit in the side car of a Triumph."


Automatically Appended Next Post:

ShumaGorath wrote:

Frazzled wrote:

ShumaGorath wrote:I'm sure the skyrocketing corporate profits are going to feel terrible that their corrupt and shady accounting has to be put into overdrive to avoid paying any taxes at all even more. How many major corporations in the U.S. don't pay any of these taxes at all, let alone44% again? How big was that number?

http://www.huffingtonpost.com/2012/02/03/corporate-profits-tax_n_1253007.html
I'm sure they'll be ok. Hey, maybe they'll take some of the profit margin and actually pay their workers a livable wage! Yeah, probably not.

You know most retirees focus on stocks with dividend income right? What do you have against old people Shuma?

The entitlement crisis.

er...what?

I haven't gone into the specifics, but what actually is being proposed by Obama is a lowering of corporate tax rates from 35% to 28% while closing loopholes that allow some companies to pay less, and also apparently to increase dividend taxation.

I'm all for the topline decrease, and I'm also all for the closing of loopholes. But dividend taxation effectively makes investment more difficult and ultimately that makes business growth more difficult. The impact is probably less so in an environment like today where Tbills yield next to nothing and interest rates are rock bottom--capital investment still remains the only area where one can find yield--but going forward I don't see how greater dividend taxation remains beneficial for the longer term.

If only he'd simply stop at closing loopholes and making the US more competitive, he'd probably do alright.

Obama 'needs' to raise capital now, not to deal with the defecit but in order to buy the populace by spending big on something flash closer to November.

Taxing divedends hurts the tight not the left, and they aren't going to vote for him anyway. He wants to sway middle ground poor voters who have seen little good come out of his promised 'change' since 2008 and are ill educated enough to not see much past the immediate and are thus buyable.

Expect a low rate tax cut or a minimum earnings cut off rise about September time, or an increase in food stamps.

Meanwhile of this makes US industry less competetive, or more inclined to avoid tax, that only hurts America, not Obama, so it doesnt really matter that much.

Orlanth wrote:Obama nweeds to raise capital now, not to deal with the defecit but in order to buy the populace by spending big on something flash closer to November.

You do realize these changes won't come into effect until October, right?

dogma wrote:

Orlanth wrote:Obama nweeds to raise capital now, not to deal with the defecit but in order to buy the populace by spending big on something flash closer to November.

You do realize these changes won't come into effect until after the election, right?

Would it need to? A planned tax hike means future planned tax revenue, which is calculated in advance.
Obama can borrow for his miracle.

This is basic election economics 101. For a government to have capital to work with it needs to borrow first spend and then tax, with the first stage being setting up a plausible tax setup against which you borrow.
Almost no countries work on a save-spend basis, I m not sure if even Switzerland can do that anymore, its not how the global econkmy 'works'.

Orlanth wrote:
Would it need to? A planned tax hike means future planned tax revenue, which is calculated in advance.
Obama can borrow for his miracle.

Yes, he can, though I doubt he will, or should. Why would you add to the deficit in an election in which the deficit is likely to be front and center? I mean, I guess if the economy starts to tank again, but that's not likely.

Either way, he doesn't need to raise taxes to do that.

Orlanth wrote:
This is basic election economics 101. For a government to have capital to work with it needs to borrow first spend and then tax, with the first stage being setting up a plausible tax setup against which you borrow.

Oh please, don't try to patronize me.

Revenue development doesn't work that way, and you know it; especially if the intent is to increase the deficit in an election year. You spend what you need to spend in order to produce favorable electoral outcomes, and you find the money after the fact. You don't, however, drop a tax into the mix in an election year unless that tax is explicitly part of your campaign; in this case "taxing the rich".

First, the President's budget has somewhere near 0% chance of actually getting passed. Last year the President's budget was defeated 97-0 in the Senate. The Democrats absolutely do not want a federal budget.

Second, yes, of course it wouldn't take effect until after the election. But all debt and deficit projections are based on a 10-year window or so. See, for example, the scoring of the Obamacare law, which assumed a 25% cut in medicare payments (that never actually happened).

Orlanth wrote:Obama 'needs' to raise capital now, not to deal with the defecit but in order to buy the populace by spending big on something flash closer to November.

Taxing divedends hurts the tight not the left, and they aren't going to vote for him anyway. He wants to sway middle ground poor voters who have seen little good come out of his promised 'change' since 2008 and are ill educated enough to not see much past the immediate and are thus buyable.

Expect a low rate tax cut or a minimum earnings cut off rise about September time, or an increase in food stamps.

Meanwhile of this makes US industry less competetive, or more inclined to avoid tax, that only hurts America, not Obama, so it doesnt really matter that much.

Haha! A true cynic!

Sadly, I see little to disagree with you, except that I guess the poor middle ground probably doesn't understand the intricacies of what is being touted as a friendly-to-business, top-line tax reduction to view this as being good for 'them.

biccat wrote:First, the President's budget has somewhere near 0% chance of actually getting passed. Last year the President's budget was defeated 97-0 in the Senate. The Democrats absolutely do not want a federal budget.

Second, yes, of course it wouldn't take effect until after the election. But all debt and deficit projections are based on a 10-year window or so. See, for example, the scoring of the Obamacare law, which assumed a 25% cut in medicare payments (that never actually happened).

Yes, its clearly an attempt to manipulate projections, but that's not raising capital.

Are we going to have a thread for every centrist policy that Obama implements because right-wingers are annoyed?
I could spend all day ranting about how gak my government is...

Joey wrote:Are we going to have a thread for every centrist policy that Obama implements because right-wingers are annoyed?
I could spend all day ranting about how gak my government is...

Instead you're on here attacking the US whenever possible. Meh, and I even posted a thread about mountain lions for you.

dogma wrote:
Oh please, don't try to patronize me.

I pointed out the obvious only because you seemed to miss it.

Not breaking our truce, honest. I will refrain from making comments about me, you, the past, and being patronising in light of this.

dogma wrote:
Revenue development doesn't work that way, and you know it; especially if the intent is to increase the deficit in an election year. You spend what you need to spend in order to produce favorable electoral outcomes, and you find the money after the fact. You don't, however, drop a tax into the mix in an election year unless that tax is explicitly part of your campaign; in this case "taxing the rich".

I don't buy this, taxes take time to implement and if you make a change in election year it needs to be a positive one.

Making a negative change might win some votes by shadenfreude, but relatively few. The lulz is rarely a good politiocal moti9vatior unless the target group is really hated and completerly diimpowered. This doesn't define the 'successful in business' in most of America.
However negative change is much better at making enemies. Obama is savvy enough to know he needs the tax revenue profile to offset something to help him instead.

To make enemies of big business in election year means he must be looking at buying grass roots voters en masse. A major hike on corporate dividends might create a large enough offset to borrow with.

Orlanth wrote:
I dont buy this, taxes take time to implement and if you make a change in election year it needs to be a positive one.

Precisely one fiscal year, which is why this is not a capital issue.

Orlanth wrote:
Makeing a negative change might win siome votes by shandenfreude, but probably very few.

Saint Reagan, and the younger Bush, made quite a few friends by cutting taxes.

Orlanth wrote:
However its much better at making enemies. Obama is savvy enough to know he needs the tax revenue profile to offset something to help him instead.

I'll tell you, straight up, that he doesn't. The statistical evidence doesn't point towards a position that entails positive support for additional taxation or spending, unless its couched in taxes on the wealthy. You can hem and haw about qualitative judgment all you want, but the evidence isn't there.

My guess is this is positioned to, as I said, manipulate budget projections, and convince people disenfranchised by the extension of the Bush tax cuts that Obama isn't in the pocket of the wealthy.

http://www.bbc.co.uk/news/world-us-canada-17131158

Obama announced plans to close loopholes and lower corporate tax rates to 28%.

Lets see how people handle the Kung fu.

ShumaGorath wrote:http://www.bbc.co.uk/news/world-us-canada-17131158

Obama announced plans to close loopholes and lower corporate tax rates to 28%.

Lets see how people handle the Kung fu.

Right... and he appears to be funding it by raising taxes on dividends. This essentially taxes corporations 'less', or at least more equitably, and also taxes individuals more.

As I already said, I'm all for dropping tax rates and closing loopholes. This end-around at taxing the rich 'more' by making it harder to invest in American businesses is the bit that I dislike.

A plan to cause corporate loopholes to finally be closed? Let's see how long that sits around in the house and senate.

I continue to find it absurd that the county is called the "United States of America" and yet our government is FAR from united.

dogma wrote:

Orlanth wrote:
Makeing a negative change might win some votes by shadenfreude, but probably very few.

Saint Reagan, and the younger Bush, made quite a few friends by cutting taxes.

indeed, thats a positive change, not a negative one. Reagan governed in good times and thus could afford to hit the treasury a little by lowering taxes at election time.

Obama doesnt have that luxury, as times are hard. This of itself is not Obama's fault, however reckless borrowing to buy the election will be.

dogma wrote:
I'll tell you, straight up, that he doesn't. The statistical evidence doesn't point towards a position that entails positive support for additional taxation or spending, unless its couched in taxes on the wealthy. You can hem and haw about qualitative judgment all you want, but the evidence isn't there.

This proved my point. Increasing top rate of tax will make some people 'happy', but that doesn't lead to vote for you levels of happy.
People are not really motivated that much of the other guy takes a hit and they like it..
People are motivated a little more if the otjher guy takes a hit and they dont like it.
People are motivated a lot more if they take a bonus.
And people are motivated most of all if they take a hit themselves.

Tax the rich causes emotion 1 and 4. It won't do a lot for the 'poor', and thoroughly alienates the 'rich'. Its bad politics sir.

Everytime you do an action in politics some benefit and thank quietly and some lose out and howl loudly. Good political skill is magnifying the thanks and muffling the howls. Performing a directly negative action like a tax raise is inefficient in making friends, you get a few for lulz and make many vocal enemies. Its something you plan to do in a final term or the first couple of years of a term.

dogma wrote:
My guess is this is positioned to, as I said, manipulate budget projections, and convince people disenfranchised by the extension of the Bush tax cuts that Obama isn't in the pocket of the wealthy.

Obama for all his many faults is a very savvy man when it comes to voter manipulation, its how he came from nowhere to win selection and the presidency. He wont be pissing off corporate America, who can produce media muscle and large cheques for campaign funds this close to election. no way. He needs to buy a vote block and if he is writing off sections of the US electorate, which a tax hike will do, it can only be to gain resources to build support elsewhere.

ShumaGorath wrote:http://www.bbc.co.uk/news/world-us-canada-17131158

Obama announced plans to close loopholes and lower corporate tax rates to 28%.

Lets see how people handle the Kung fu.

Drop corporate tax rates by 7 points, increase dividend tax rates by 30 points. Brilliant.

Old method: corporation earns $1, shareholder gets $0.65.

New method: corporation earns $1, shareholder gets $0.60.

Orlanth wrote:
indeed, thats a positive change, not a negative one. Reagan governed in good times and thus could afford to hit the treasury a little by lowering taxes at election time.

Obama doesnt have that luxury, as times are hard. This of itself is not Obama's fault, however reckless borrowing to buy the election will be.

So you're using "positive" and "negative" change to refer to actions you approve and disapprove of?

No offense, but one of the reasons I dislike your arguments is that you almost never make clear points, and tend to base everything in personal approval rather than an appreciation of statistical evidence, or even a pretense to objectivity. It makes you very difficult to converse with.

In short, you appear to argue from emotion, not reason, and the above is an example of that. Even with your clarification, I'm still not sure what you mean by "positive" and "negative", and it rings a lot like an ex post facto argument.

Orlanth wrote:
This proved my point. Increasing top rate of tax will make some people 'happy', but that doesn't lead to vote for you levels of happy.

In this cycle, it does.

Orlanth wrote:
People are not really motivated that much of the other guy takes a hit and they like it..
People are motivated a little more if the otjher guy takes a hit and they dont like it.
People are motivated a lot more if they take a bonus.
And people are motivated most of all if they take a hit themselves.

Tax the rich causes emotion 1 and 4. It won't do a lot for the 'poor', and thoroughly alienates the 'rich'. Its bad politics sir.

I completely disagree with you. Revolutions have begun over the perception that boons are handed out to some people, and not others. Successful revolutions have resulted in the group receiving the boon being whipped through the streets, so to speak.

This isn't a revolution, but to pretend that the hierarchy of motivation you've described is omnipresent is uniform, and universally applicable is, well, ignorant of reality. I don't mean that offensively, I just have no better language to express my position.

Orlanth wrote:
He needs to buy a vote block and if he is writing off sections of the US electorate, which a tax hike will do, it can only be to gain resources to build support elsewhere.

Simply "taxing the rich" does that.

biccat wrote:

ShumaGorath wrote:http://www.bbc.co.uk/news/world-us-canada-17131158

Obama announced plans to close loopholes and lower corporate tax rates to 28%.

Lets see how people handle the Kung fu.

Drop corporate tax rates by 7 points, increase dividend tax rates by 30 points. Brilliant.

Old method: corporation earns $1, shareholder gets $0.65.

New method: corporation earns $1, shareholder gets $0.60.

Only for companies giving dividends*

Sadly by law and the congressional budget office, a raise in a tax rate means a raise in overall revenue, and a tax cut means a cut in raised revenue.

This is why they always talk about it in those terms. Sadly a lot of people beleive this now to be true, even though it has been misproven concept.

You have to account for the fact such policies will affect how much of a behavior is done after they are enacted.

Rather than the very wealthy people getting paid in dividends as much, they will find a new method of being compensated. Some IRA, 401k, and retireees will figure that out as well. This will result in a net loss of tax revenue generated by the increase in the tax rate.

People are always looking for ways to pay less in taxes. Increasing any tax rate drives them to find a way to avoid it.

Let's learn something here so at least we have a handful of people who are educated on the subject. A raise in tax rate does not always equal a raise in revenue.

http://en.wikipedia.org/wiki/Laffer_curve

As an example, my current overall tax rate is 58.9% approx, your rate may vary by state or country. I may be off by a few tenths as my current taxes are not yet filed. If tax rates on any of the things I pay were to go up, I would start looking at cutting back on my use or tax liability, resulting in not gain for the government coffers.

Since we are specifically talking about dividends, I have an IRA, currently all of my stocks that pay dividends are set to reinvest, and I would keep it this way. More people would set this option, or transfer from owning stocks to interest bearing CD's, Bonds, etc, so they would continue to have cash flow income.

Further more if there was a raise in the Capital Gains tax( this idea seems to get kicked around a lot), it would make me think twice and maybe even put off my current plans of using my IRA to open a new business. I might possibly not be able to afford it if a said rate increase went through. Which means I would not open a new business, and at least 5-10 people would not be hired to work there.

You have to account for behavior of people when it comes to tax rate increases and decreases.

Shadowseer_Kim wrote:Sadly by law and the congressional budget office, a raise in a tax rate means a raise in overall revenue, and a tax cut means a cut in raised revenue.

This is why they always talk about it in those terms. Sadly a lot of people beleive this now to be true, even though it has been misproven concept.

To be fair, most of the time it is.

Obama's number is horrible, but it won't get through.

Meanwhile I'm just going to stare in disbelief at America's refusal to treat dividends like any other income, tax it as part of overall personal earning for the year and grant a tax credit for tax already paid by the corporation.