Quote:
Originally Posted by THespos
The only issue I have with this (after thinking about it for only a few minutes, mind you) is that if dividends aren't taxed as ordinary income, wouldn't that become a primary means for the 1% to have their cake and eat it, too? If they didn't reinvest dividends, they're still getting the benefit of an ownership stake in a company, which is (hopefully) growing in value, while also pulling profits out without it being taxed like other income. Why do you think dividends should get a break?
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You have to figure out what you want: Do you want a strong growing economy, or do you want to punish the rich? Dividends are the reward for having your money invested in a strong company. We want to encourage people to put their money into strong companies. If you make only cap gains on stock sale advantaged, this encourages people to put money into speculative enterprises like dot com companies, which is a perverse incentive that puts investment into the wrong sorts of enterprises.