December 13th, 2002


How double taxation screws the little guy....

For Richer, Not for Poorer
By Stephen W. Stanton 12/11/2002
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A recent TCS column discussed the dark side of double taxation. In a nutshell, it demonstrated how this quirk of our tax code makes the stock markets more volatile, increases the number of bankruptcies, and chokes off dividend payments to shareholders, nearly a third of whom make less than $30,000 a year. The story gets worse from there. So bad, in fact, that it calls for another column.

What many voters and politicians fail to grasp is that double taxation is often regressive. In fact, Bill Gates does not worry about double taxation. Microsoft does not pay dividends, even with $38 billion in cash and short-term investments. Warren Buffet has not received a nickel in dividends from Berkshire Hathaway over the past 25 years, though the company is worth $111 billion dollars. As a result, the federal government has raised absolutely no revenue from taxing the dividends of these two companies. (Forty percent of nothing is nothing.)

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