Talk:Dividend tax

From Wikipedia, the free encyclopedia

Where did those statistics regarding the effect of the dividend tax cut come from? I prepare tax returns for a living, and I think the effects on high-income ( > $300K) returns are overstated, and the effects on moderate-income returns (for retired people, not for working people) are understated. Maybe my clients aren't a good statistical sample. Anyway, I'd sure like to see a cite to the source for those numbers. -- gbroiles 19 Aug 2003

I think this article comes across as pure advocacy for elimination of double taxation, rather than information as to what it is. There appears to be a one-sided debate contained within the article, with no small bias evident behind the argument for its elimination. The article needs to be toned down, and a more thorough explanation of the different positions is necessary. There are such animals as "rich" people, and they do earn a lot of money from dividends. People who have little understanding of commerce and economics will come here looking for a reasoned explanation, perhaps in order to decide whether they support such a tax. Anyone who is sensitive to biased language will dismiss the information out of hand, and in fact such an evident bias may have the opposite of the desired effect. This sort of treatment of the subject detracts from its credibility, and dilutes the value of wikipedia.

Contents 1 Anonymous one, it is a non-linear world 2 npov 3 what was gutted? 4 Merging? Cross referencing? 5 Double Taxation 6 NPOV, about abolition 7 Double taxation bias 8 "United States" section

[edit] Anonymous one, it is a non-linear world

The article could probably use some wordsmithing, but feel free to present the argument for double taxing of dividends and thus having a tax system that favors debt financing of corporations if you can make a case for it. All I've ever heard is the short-sighted class warfare rhetoric, which not only is simplistic linear thinking, but is wrong because it is the working poor and not the rich that get hurt by the layoffs cause by the inflexible rigidity of debt financing.--Silverback 07:21, 8 Nov 2004 (UTC)

The fact that this article's neutrality is not called into question by Wikipedia and the article for the "Working Poor" is, seems to be further proof that Fox News has bought the Wikipedia. --

---

Wow! Who wrote this? The Cato Institute? Ewlyahoocom 11:34, 16 January 2006 (UTC)

The line previous to yours was written by an anon.--Silverback 05:34, 5 April 2006 (UTC)

Hi SB, my comment was actually referring to the article itself and its POV, before the rewrite. (I'll add a linebreak up there to try and make that more clear.) Ewlyahoocom 16:29, 5 April 2006 (UTC)

[edit] npov

Why exactly is the NPOV tag on this article? The only specifics I see mentioned thus far on the talk page are calls for citations and "more thorough explanation." There are separate tags for those things....

Thoughts? Ur Wurst Enema 05:17, 30 January 2006 (UTC)

Perhaps you missed the comments starting "I think this article comes across as pure advocacy..."? I agree with that! The page has barely a description of what the tax is (e.g. what is "taxed at the shareholder's level" supposed to mean?) then launches into a screed. Ewlyahoocom 16:21, 31 January 2006 (UTC)

None of that is specific. If you are so sure that this article is pure "advocacy" or a "screed," surely you could explain why. "I don't like it" ipso facto does not constitute POV. --Ur Wurst Enema 23:13, 21 February 2006 (UTC)

[edit] what was gutted?

The discussion of a double tax on dividends favoring debt over equity financing was gutted, and the resulting implications for layoffs and business cycles. Perhaps you can explain why you deleted that.--Silverback 09:28, 7 April 2006 (UTC)

Here's the original:

Supporters pointed out that the bottom 60% of wage-earners already pay little in taxes but are probably harmed the most by the double taxation. When corporations decide how to raise their capital, they see that the interest payments on debt are taxed only once while the dividend payments on equity are taxed twice, thus the tax system favors going into debt and becoming highly leveraged. Highly leveraged companies must layoff or furloough more workers more quickly at the first signs of an economic downturn. The double tax on dividends thus increases the depth of recessions in the business cycle. It is the bottom 60% of wage earners that suffer more than the "rich" from layoffs and deeper recessions. Given the negative impact of leverage on the business cycle, from a macro-economic perspective, it would be wiser to double tax interest rather than dividends by reducing the deductability of interest.

Here's the rewrite:

Abolitionists claim that more than half of all wage-earners already pay little in income taxes (not counting social security "taxes"[1]) and are "probably" harmed the most by double taxation: a company wanting to raise capital must decide between issuing new debt or issuing new equity; the differing tax treatment encourages the company to issue debt and the company becomes highly leveraged. Later during an inevitable economic downturn, the company -- not being able to bear the risk of missing an interest payment -- will be quick to lay-off workers. By comparison, abolitionists claim, a company has more flexibility with regard to dividend payments.

Again, I'm not sure I understand what you mean by "gutted". Can you be more specific? Ewlyahoocom 12:21, 7 April 2006 (UTC)

The first explanation is better and more detailed. Many readers will not be economically literate, and whole sectors of the electorate don't understand indirect and non-linear effects. Note that even the more extensive original explanation, does not get into the growth benefits from lowering the cost of capital and the effects that has on business evaluation of the value of future returns for a project or expenditure. Deeper recessions does convey a sense of loss of economic growth, but even that does not capture the growth lost even in prosperous times due to a higher cost of capital.--Silverback 10:19, 8 April 2006 (UTC)

Oh, please! If you're so worried about the readers level of economics literacy why would you even use words like "capital", "equity", "leveraged", "depth of recessions", "macro-economic perspective", "deductability[sic.] of interest". In any case, most companies are not exactly known for optimizing their gearing ratios in the first place. So I think either you're either trying to turn this back into an advocacy piece -- or upset about having someone edit your writing (in which case see the note at the bottom of every edit page that reads If you don't want your writing to be edited...) Ewlyahoocom 14:55, 8 April 2006 (UTC)

There is information even in words that the reader doesn't understand. That information is that perhaps if they don't understand them, their opinion on the subject may not be that well informed. Of course, the advantage of wikipedia, is that those terms can be wikilinked, making remedying that ignorance easier. If a clear explanation of the impact of tax policy makes the article appear like an advocacy piece then perhaps you should reconsider your own position. Of course, companies don't optimize their gearing ratios, there is a natural tendency of "owners" to value debt financing over equity financing, since equity financing means that their power or control is diluted. Unfortunately, double taxation of dividends only reinforces and excuses this tendency. There is also a constituency the prefers highly leveraged companies because the volatility and possible growth in stock value are magnified, turning the stock markets into more of a casino. I'm sure even you can see that the ordinary working man is being duped if he falls for the class warfare rhetoric that says that only the wealthy are benefitted by eliminating this double tax.--Silverback 06:50, 9 April 2006 (UTC)

I'm sorry, by "class warfare rhetoric" are you now suggesting that your revert on this article was because it currently exhibits a non-neutral point of view (WP:NPOV)? Could you please be more specific, perhaps citing an example? And while your comments about turning the stock market into a (Heaven forefend!) casino are interesting I'm not sure that a page about dividend taxes is the most appropriate place for that information, nor do they appear in the verision of this text that you reverted to. Ewlyahoocom 08:09, 9 April 2006 (UTC)

You're right, it doesn't appear in the version I reverted to, but that is how I could have made it arguably POV. What is your wikipedia excuse for gutting a perfectly good and neutral explanation?--Silverback 10:14, 9 April 2006 (UTC)

I disagree with your characterization that anything was "gutted". Can you be more specific? Ewlyahoocom 11:17, 9 April 2006 (UTC)

Yes, the mechanism for deepening recessions and business cycles was deleted.--Silverback 12:32, 9 April 2006 (UTC)

[edit] Merging? Cross referencing?

We have:

Double Taxation United States tax reform Dividend tax

That have common elements. US Tax Ref seems pretty sparce as well. What are the merits of keeping these separate?--Duemellon 14:25, 15 May 2006 (UTC)

[edit] Double Taxation

Is a loaded term. It completely mischaracterizes dividend payments as if they are a rare instance of the same "money" being taxed when it changes hands. To highlight this as "double tax" but not apply the term to sales taxes, employee/employer wage income tax, & inheiretance tax, is a political ploy. The phrase itself was coined to be loaded, almost rhetorical, but not properly applied. Simply using the term without the qualification that is it a misleading phrase makes this whole article NPOV. --Duemellon 14:30, 15 May 2006 (UTC)

Agreed. --Bluerattle 29 May 2006

I will edit this article not to use that term in exception of to explain it's loaded nature & how it is being used in the financial-political landscape if there is no one here who disagrees & doesn't defend it's usage in this fact based article.

Edited & updated. Also went through & changed the heading from those "oppossed to the elimination" as that phraseology is also biased. Altered it to read a more neutral depiction of those who want to keep the dividend. Added some other reasons for the resistance. Removed all subsequent references to "double tax". Specifically for the Romanian one which had a conflictory statement of: THey pay a 5% tax but there's no double tax. If they paid 5% after the company paid before paying dividends, its what's referred to as the dreaded "double tax". --Duemellon 13:53, 31 May 2006 (UTC)

[edit] NPOV, about abolition

Because the header of that section says it's about the view of the abolitionists, it is alright to say it's biased & POV. I think the information, although technically correct but inaccurate in it's completeness, should remain. The idea that the poorer people pay so much taxes is true, but mischaracterized & used as a rallying point. I would like it returned, but maybe a caveat or disclaimer for the skewed information. --Duemellon 15:00, 22 June 2006 (UTC)

[edit] Double taxation bias

I edited the page to eliminate the inaccuracy. The term is NOT used exclusively for the dividend tax. Economists have been applying the term to the income+sales tax for much longer than the recent debate over the dividend tax. It is often a central argument for a consumption tax to replace the income+sales tax.

In recent years it has been used in popular political debates to exclusively refer to dividend taxation. To apply the "double tax" nomenclature to the dividend tax is a clear misrepresentation of reality considering there are multiple transactions taking place. The literal translation of "dividend tax" would be appropriate if it were used more widely for all points of taxation on a cash stream/asset transfer through the life of the cash/asset. However, it's limited use is what makes it an inaccurate use. --Duemellon 16:58, 1 August 2006 (UTC)

[edit] "United States" section

This section needs to be rewritten. It launches straight into political campaigning with making any attempt to explain what the current law says first. I would expect something like what I have written for the UK. --Red King 21:37, 1 August 2006 (UTC)

I'd be interested in knowing the exact definition of "low-income" as it pertains to the 5%/15% dividend tax levels. GreenReaper 16:21, 5 October 2006 (UTC)