On Dividend Taxes...

Greg Mankiw says that if your goal is to keep dividend taxes low, you should vote for Obama:

On Dividend Taxes, It’s a Post-Partisan Race, by N, Gregory Mankiw, Economic View, NY Times: ...Before 2003, when a person received dividends from his stock holdings, this income was taxed at ordinary income tax rates. That is, a dollar of dividends generated the same individual income tax liability as did a dollar of wages.

But many economists have long argued against taxing dividends this way. Dividends are a stockholder’s payment from corporate profits, and these profits have already been subject to the corporate income tax. Any tax on dividends represents a second tax on essentially the same income.

One can question whether this double taxation of income from corporate capital is fair. But fairness aside, there is also the problem of incentives. Taxing dividends twice substantially raises the overall tax burden ... and distorts various decisions. Whenever taxes, rather than true costs and benefits, drive the allocation of resources, the economy shrinks below its potential. ...

Policy wonks like me have long hoped for changes in the tax code that would eliminate, or at least mitigate, these problems. In 2003, President Bush proposed that all dividends paid out of income that had already been taxed at the corporate level should be exempt from tax at the personal level. ...

Although Congress did not give the president exactly what he sought, it gave him a large chunk of it. The top tax rate for dividends was cut to 15 percent, less than half the top rate for ordinary income. The adverse incentives of the tax ... became much smaller. ...

Senator Obama ... has not been coy about wanting to use the tax code to redistribute income... But for dividend income, Senator Obama has proposed only a modest increase in the top tax rate, to 20 percent from 15 percent. ...

In light of Senator Obama’s stand, the politics of dividend taxation may take some surprising twists. Senator John McCain wants to maintain the current tax rate of 15 percent on dividends..., but it is a good bet that if Senator McCain is elected president, while Congress remains Democratic, Congress won’t give the Republican president what he wants. They would instead let the Bush tax cuts expire, returning the dividend tax for high-income taxpayers to about 40 percent.

By contrast, if Mr. Obama is elected, Congressional Democrats will be less likely to balk at his proposed 20 percent dividend tax rate... On the issue of dividend taxation, Barack Obama may be the candidate with the best chance of preserving George Bush’s legacy.

Update from Dean Baker:

Greg Mankiw Promotes the Myth of Double Taxation, Dean Baker: There is an old myth developed by rich people at some point in the distant past that paying taxes on dividends amounts to "double-taxation." The argument is that profits are already taxed at the corporate level, so taxing money when it is paid out as dividends to shareholders is taxing the same profit a second time. Gregory Mankiw, a Harvard University professor and former top economist in the Bush administration, pushes this line in a column in the NYT.

The trick in this argument is that it ignores the enormous benefits that the government is granting by allowing a corporation to exist as a free standing legal entity. The most important of these advantages is limited liability. If a corporation produces dangerous products or emits dangerous substances that result in thousands of deaths, shareholders in the corporation cannot be held personally responsible for the damage. The corporation can go bankrupt, but beyond that point, all the shareholders are off the hook, the victims of the damage are just out of luck.

By granting corporate status, the government has allowed investors to shift risk to society as a whole. In exchange for this and other privileges of corporate status, the corporation must pay income tax on its earnings. We know that investors consider the benefits of corporate status to be worth the price in the form of the corporate income tax, because they voluntarily choose to form corporations. If investors did not consider the benefits of corporate status to outweigh the cost of the income tax, then they are free to form partnerships which are not subject to corporate income tax. In this way, the corporate income tax is a completely voluntary tax. Anyone can avoid the tax by investing in a partnership, or alternatively, any corporation can be restructured as a partnership.

The complaint about double taxation is an effort to get the benefits of corporate status for free. It is understandable that rich people would want to get benefits from the government at no cost, just like most of us would prefer not to pay our mortgage or electric bill. But, there is no reason for government to be handing out something of great value (corporate status) for free. If rich people don't like the corporate income tax, they have a very simple way to avoid it -- don't invest in corporations. The problem is that the rich are just a bunch of whiners.

Comments

[Bill]

Corporations should be taxed like REITs or partnerships. If they distribute the taxable income, then it isn't taxed at the corporate level, but at the recipient level. This would:
1. Make it clearer to all shareholders which companies are producing value and returns.
2. Address the falsehood that corporations can pay taxes. They can't - only consumers, workers and investors can pay taxes.
3. Make our tax system more progressive - if the dividend is received by a rich person it would be more heavily taxed than if it is received by a poor person. If it is received into an IRA or a foundation, it wouldn't be taxed. It would also simplify our tax code. For instance, the silly 15% tax on dividends (which is also fraught with complexity) would now be unnecessary as the income is no longer taxed at the corporate level.
4. Lead to better corporate governance - see #1. Companies that thought they had a valuable investment opportunity would be more likely to have to raise the capital in the debt or equity markets. This increases transparency and shifts power from management to owners and investors.
5. Make stock options more meaningful in that they would reward the creation of true value, not simply the hoarding of a company's income in bank accounts or through stock repurchases.
Related notion: If corporations aren't paying taxes, they should be banned from making contributions to political campaigns. Those contributions should be made by the true constituents; consumers, workers and investors.

[Blissex]

«Address the falsehood that corporations can pay taxes. They can't - only consumers, workers and investors can pay taxes.»

That is a really dumb statement. A tax is just a payment of money to the state proportional to something. Of course anything with money, including a corporation, can pay a tax.

Taxes are just generic payment fees to cover government expenses, and just as corporations can pay supplier for providing electricity, they can pay the state for providing its services.

Sure, when a corporations pays anybody something, ultimately it will be investors or consumers or workers that pay for that; if electricity prices rise, corporate product prices have to rise or workers and investor compensation to decrease, but this applies to taxes as well as anything else.

In the end what matters as to taxation is that:

* It covers the cost of providing state services.

* It is cheap to raise and difficult to avoid.

* Its impact be mostly neutral, or at least not too
different from the intended one.

As to these requirements taxing a bit a number of things works well, and taking money out as it passes through a corporation's account is both cheap and difficult to avoid.

[Blissex]

As to double taxation, Mankiw is characteristically intellectually dishonest.

First of all, taxing profits just at the corporate level at 15% means in effect repealing the progressive income tax mostly for rich people, and giving a gigantic boost to the price of stocks, which are owned mostly by rich people.

Secondly, it actually means exempting the income of mostly rich people from any taxation, as most rich people will create shell corporations abroad in fiscal havens with no corporate taxes, and then pay dividends from those to themselves in the USA, and pay absolutely no tax.

Thirdly, it also means the end of taxation on capital gains: because while it is sometimes not so easy to turn accounting profits into accounting capital gains, it is extremely easy to do viceversa and turn capital gains into profits, and by doing so abroad in a corporate tax haven means both profits and capital gains become tax exempt.

Mankiw's agenda seems more to ensure that the deserving, clever, hardworking, superior rich should not pay for the costs of running the USA state, but the exploitative, gross, parasitical, inferior poor should do so instead.

As to this I will repeat here one of my modest proposals: if taxing capital gains and corporate profits acts as a disincentive to growth and trickle down prosperity, a TAX CREDIT would work wonders.

The government should raise raises drastically on low income wage earners, who just hang around enjoying the luxury of their cadillacs and t-bone steaks, contributing almost nothing to the economy, to fund a dollar-for-dollar TAX CREDIT for corporate profits and capital gains, investing in the work of the best and brightest, in those who create real value and prosperity.

Anything less is inconsistent with the argument that low taxes on the unproductive poor and higher taxes on the productive rich stifle progress.

[Progressive]

To eliminate double taxation, and still maintain progressive taxation, eliminate taxation of dividends at the corporate level. When individuals receive the dividends, they will pay taxes at rates commensurate with their income.

The US will also be able to compete for the best corporations. Nations around the world are lowering corporate tax rates to attract the most productive corporations.

[ken melvin]

I heard, just the other day, that most corporations pay little or no taxes.

[Blissex]

«To eliminate double taxation, and still maintain progressive taxation, eliminate taxation of dividends at the corporate level. When individuals receive the dividends, they will pay taxes at rates commensurate with their income.»

Well, consider how easy it is then to evade tax, by paying the dividends to a foreign nominee account.

Double taxation is a complete red herring devised by intellectually dishonest people like Mankiw to distract from the issue, which is total tax paid.

Paying say 20% at corporate level and then 20% at individual level is not much different from paying just 36% at the corporate level or just 36% at the individual level, the same money is received by the government.

And taxing at both levels reduces the scope for tax avoidance or evasion.

The obvious solution to all these concerns that many countries use is to tax corporate dividends at the highest personal tax rate, to tax dividends at the individual level too, but to let individuals deduct from their tax payment the tax already paid at the corporate level.

But Mankiw's goal it to reduce taxation of the income of rich people to zero by making it easy to fully avoid or evade taxes on profits.

[DR]

Hell, we have given the business world the lowest interest rates, the lowest corp tax rate, the best accelerated depreciation rate and the lowest dividend rates in recent history but still no BOOMING ECONOMY!

I'm getting parched waiting for the trickle down!

[Real Person from the Real World]

I barely make ends meet, but I have some stock, and out of the dividends I makeup what I don't earn to pay bills. Bank paid interest is so low, and interest charges by credit cards, student loans, et al and the price of services by those able to maintain their prices for needed services (including law, roof, et al) are all so high, I can barely keep a balance in checking! I do not have a pension, but I do have IRAs with stocks that pay dividends.

Dividend taxes are a sore point that cause anxiety for me, along with the anxiety of a low pay check and no health care or benefits. Perhaps Bill Gates could live on his stock dividends alone, I can only live with their help. I will vote for BO, but this is my vulnerable spot in the Republican counter attack.

[Progressive]

I agree. Corporate pensions are on their way out (for all the good a non CPI indexed pension is), to be replaced by 401k plans. Because of constant inflation, advisers counsel staying away from bonds, and putting the 401k in stocks as an inflation hedge. Because so many people flocked to stocks as an inflation hedge, the dividend yield fell from 4% to 2%. Taxing away these paltry dividends at the corporate level, so 401k holders have to pay the tax regardless of the supposed 401k tax advantages, is indeed a sore point.

Then the poor soul who owns a mutual fund in a taxable account gets hit with double taxation. Even if she is in a low tax bracket, paying taxes at the corporate level pushes her into a very high dividend tax bracket.

[Housing versus Business Capital]

Greg's point about generous tax advantages for homes, and punitive taxes for savings that can expand business, results in too little savings being available for business expansion. Our entire economy is essentially tilted toward inflation hedges (homes became the de facto inflation hedge because gold was illegal for so long). Inflation hedges can't expand productivity, and borrowing from overseas to expand business is not a long term solution.

[Blissex]

«Then the poor soul who owns a mutual fund in a taxable account gets hit with double taxation. Even if she is in a low tax bracket, paying taxes at the corporate level pushes her into a very high dividend tax bracket.»

That's precisely why Mankiw proposes to remove the individual taxation of dividends, instead the taxation at the corporate level: because his sponsors pay individual tax at a bracket which is higher than that of corporate tax, and f*ck everybody else.

The correct way to eliminate double taxation, if that is desired, is of course to tax dividends at the individual level *and* at the corporate level, but allow a tax credit to the individual equal to the corporate tax paid. So people at a low income tax bracket actually get back the corporate tax money instead of paying more tax.

But since this would mean upholding the anti-progress principle of higher tax for higher income, and would mean less tax on the unproductive loafers in the bottom-of-the-barrel 80% of the population, Mankiw does not even mention it. It is immoral to leave suckers any money...

[Blissex]

So people, just to make sure everybody understands the underhand logic of Mankiw, a simple (and therefore highly approximate) numerical example.

Suppose that the overall goal is to raise 36% of profits as government revenue; whether this is achieved by a single 36% tax or two 20% taxes is numerically irrelevant. If double taxation is eliminated, then to maintain the same amount raised, the tax rate must go up. But of course Mankiw does not point this out; he just wants to make the tax load on rich Americans lower.

There are in effect 4 alternatives to the "raise 36% goal":

* 36% tax on corporate profits. This is extremely bad because it guarantees that all profits are booked abroad in tax havens and repatriated as dividends to USA citizens tax free.

* 36% tax on dividend personal income. This is very bad because it guarantees that either corporations never pay out dividends or that all profits are booked abroad to foreign corporations.

* 20% tax on corporate profits and 20% tax on dividend income. This is sort of OK because some tax is collected on both sides of the transaction and it becomes more difficult to totally avoid or evade the tax. Yes, it is double taxation, but the same amount if raised, so why worry?

* 36% tax on corporate profits and dividends taxed as income, with the 36% paid by the corporation on the dividend as a tax credit to the receiver of the dividend. For example: some company makes $100m in profit, and distributes $50m of it as dividends on 10m shares each worth $100, thus $5/share. Company pays $36m in corporate tax on the $100m profit, and the shareholders receive $50m, of which $32m in cash and $18m in tax credit. So someone who has 100 shares gets $320 in cash from the company, and a $180 tax credit, and pays say 10% income tax on that, or $50, and then gets a refund for $130 from the taxman. If the owner of the 100 shared pays 36% personal income tax, he owes $180, that balances the $180 tax credit, and pays no additional tax.

Why isn't Mankiw proposing that? :-)

[anne]

The yield on the Vanguard S&P Index is 2.13%, after the minimal costs. That means holdings of $1 million dollars would yield $21,300 in dividends. A tax of 20% would mean $4,260. Whether the tax is 15% or 20% or were to be increased to 30% would make almost no difference to those to those holding far less than $1 million is taxable stock as is the case for almost all households, or to those who hold enough stock for dividends of say $210,000.

I have no idea what this essay is about, but I imagine there is an important point for those holding $10 million is taxable stock who could easily switch to the Vanguard Growth or Mid-Cap Index where dividends are only 0.87% or 1.50 respectively. Dividends were were lots more important than they have been since about 1990.

Berkshire Hathaway has never paid a dividend. Oh well.

[Too Much Fed]

I have a better idea, outsource mankiw's job to someone in india or china for 1/20 of what he is making now. The guy is another STUPID IDEOLOGUE like greenspan, as in the spoiled and the rich can NEVER have too much money. I bet someone can program a robot to do what mankiw does.

He is just pandering to the republicans so he can have another gov't job the next time they are in the white house.

[anne]

So we get the numbers, the yield on the Vanguard S&P Growth Index is 0.87%, after the minimal costs. That means holdings of $1 million dollars would yield $8,700 in dividends. A tax of 20% would mean $1,640. Whether the tax is 15% or 20% or were to be increased to 30% would make almost no difference to those to those holding far less than $1 million is taxable stock as is the case for almost all households, or to those who hold say $10 million is taxable stock and who would owe $16,400 in taxes on dividends of $87,000 on such massive holdings.

Of course, about 1% of households owned 57.5% of American corporate shares in 2004, and who really knows anything in general about tax avoidance by the wealthiest.

[Blissex]

«I barely make ends meet, but I have some stock, and out of the dividends I makeup what I don't earn to pay bills. Bank paid interest is so low, and interest charges by credit cards, student loans, et al and the price of services by those able to maintain their prices for needed services (including law, roof, et al) are all so high, I can barely keep a balance in checking! I do not have a pension, but I do have IRAs with stocks that pay dividends.
Dividend taxes are a sore point that cause anxiety for me, along with the anxiety of a low pay check and no health care or benefits.»

«Corporate pensions are on their way out (for all the good a non CPI indexed pension is), to be replaced by 401k plans. Because of constant inflation, advisers counsel staying away from bonds, and putting the 401k in stocks as an inflation hedge. Because so many people flocked to stocks as an inflation hedge, the dividend yield fell from 4% to 2%. Taxing away these paltry dividends at the corporate level, so 401k holders have to pay the tax regardless of the supposed 401k tax advantages, is indeed a sore point.»

The Norquist plan is working very well indeed. Soon both of your will be complaining that hard working fellows like you don't like to be exploited by government taxation that is used to give free Cadillac to the welfare queens and free t-bone steaks to strapping young bucks, never mind protecting the useless seals:

http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=11699

«The 1930s rhetoric was bash business -- only a handful of bankers thought that meant them. Now if you say we're going to smash the big corporations, 60-plus percent of voters say "That's my retirement you're messing with. I don't appreciate that". And the Democrats have spent 50 years explaining that Republicans will pollute the earth and kill baby seals to get market caps higher. And in 2002, voters said, "We're sorry about the seals and everything but we really got to get the stock market up."»
«The modern Democratic Party cannot survive if everyone in the country is going to be saving 10 percent of their income and retiring on that income, the party of trial lawyers and labor unions is finished.»
http://www.thevanguard.org/thevanguard/other_writers/norquist_grover/060803.s
html
http://www.enterstageright.com/archive/articles/0903/0903norquistinterview.ht
m
«The growth of the investor class--those 70 per cent of voters who own stock and are more opposed to taxes and regulations on business as a result--is strengthe ning the conservative movement. More gun owners, fewer labor union members, more homeschoolers, more property owners and a dwindling number of FDR-era Democrats all strengthen the conservative movement versus the Democrats.»

The outcome of all this is that you will end up paying more in taxes, not less. Because if you are low income you already pay very little income tax, and if taxation on capital income and rent goes down, your income tax and especially your consumption/sales taxes will have to go up, redistributing after tax income from you to higher income people.

Of course you would like to keep your existing level of income and sales tax and have lower capital income taxes too, but the Mankiw and Norquist logic is to persuade you into voting for lower capital income taxes, and then bye-bye suckers.

[anne]

http://www.nytimes.com/2006/01/29/national/29rich.html?ex=1296190800&en=784822e4b0735ee5&ei=5090&partner=rssuserland&emc=rss

January 29, 2006

Corporate Wealth Share Rises for Top-Income Americans
By DAVID CAY JOHNSTON

New government data indicate that the concentration of corporate wealth among the highest-income Americans grew significantly in 2003, as a trend that began in 1991 accelerated in the first year that President Bush and Congress cut taxes on capital.

In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth, up from 53.4 percent the year before, according to a Congressional Budget Office analysis of the latest income tax data. The top group's share of corporate wealth has grown by half since 1991, when it was 38.7 percent.

In 2003, incomes in the top 1 percent of households ranged from $237,000 to several billion dollars....

[notsneaky]

The whole double taxation argument is a bit dishonest, since ultimately it doesn't matter how many times you tax something, just what the final (relative) rate of taxation is. If corporate income was taxed at 1% and then dividends taxed at another 1% why would it matter that this is "double taxation"? It would still be way lower than, say, the income tax. All that matters in this particular case is the relative rate of capital income taxation to labor income taxation, as per Ramsey.

[eric]

"I have no idea what this essay is about"

Honesty...

and Dean Baker would rather we stashed gold Krugerrands under our mattresses if we don't like being taxed twice:

"If rich people don't like the corporate income tax, they have a very simple way to avoid it -- don't invest in corporations."

Also, great idea, Dean Baker! "Anyone can avoid the tax by investing in a partnership, or alternatively, any corporation can be restructured as a partnership."

Let me just get the other 5,000,000 Exxon Mobil shareholders together and we'll make it a partnership.

[Real Person from the Real World]

Blissex, I look back at the era when welfare turned to workfare. I was a kid then, and the logic to me and my republican parents was simple. Now I know we were sold a bill of goods by the Libertarian and Laissez faire crowd, working to restructure our economy. I see the mess today, and the few human beings who were paraded around for taking advantage of the system compare as a drop in the ocean of misery we all face today from wild unregulated global competition, labor arbitrage by global corporations, and the loss of social safety nets for all of us. Hindsight is better than foresight. For better or worse, I will vote for BO.

[Harry Tuttle]

Abolish company tax. Individuals pay tax, not companies. Companies are simply just the means of aggregating the capital of individuals towards a common enterprise. Dividends and realised capital gains can be fully taxed at the individual taxpayer level.

[Linda]

As Real World points out, not everyone receiving dividends is wealthy or even "well-off" and the stock market offers superior returns (at least, we hope, in the long run) to bonds and interest.

Anne seems to be saying that a few hundred dollars up or down in taxes isn't significant to someone with a portfolio significantly under a million dollars. I point out that the less one has, the more significant a "few hundred dollars" becomes.

Bush's tax cuts have saved me "a few hundred dollars" every year and that has been quite significant to me. It's the ONLY thing he's done that benefitted me at all. (And it doesn't make up for the rest he has done!) Warren Buffet has said he should pay more taxes. Who am I to argue with him?

Rewarding high income earners and the super wealthy at the cost of deteriorating infrastructure unaddressed, a collapsing safety net, and budget cuts that leave govt agencies that are there to do a job underfunded and unable to do those jobs properly have not been good for the country as a whole. I think most of us who are concerned about the devastation wreaked upon this nation over the past 8 years are prepared to pay more in taxes to "save" both our country and its citizens who need its services.

We do have a tendency these days to throw out the baby with the bath water, though. Not to mention thinking in stereotypes rather than about the real variations that exist in the real world.

Blissex's proposal seems like a rather good solution. It would preserve the Bush tax cuts for those to whom "a few hundred dollars" is significant while erasing them for those to whom a few hundred dollars is pocket change. I seriously doubt that someone moving up the income ladder would be deterred by having to pay more in taxes on their dividends any more than they are now by a progressive income tax structure.

That said, and back to the real world, I've noticed that the most reasonable solutions are the hardest to achieve. On balance, I favor the candidate who might consider reasonable proposals over the candidate who must pay the ideologues' piper first in order to get anything done.

[btg]

In Canada - essentially they "gross-up" the dividends to approximate the average before-tax corporate income, and then the grossed-up amount is added to general personal income, to which normal progressivity is applied.

see http://www.taxtips.ca/dtc/enhanceddtc.htm

Even so, at different times even this has been criticised ont he basis of it not providing full relief from double taxation - but I am generally in agreement with Dean Baker.

[Jon H]

eric wrote: "Let me just get the other 5,000,000 Exxon Mobil shareholders together and we'll make it a partnership."

So invest in a new business, duh.

That's the only kind of investment that means anything for the economy. Buying old shares on the open market means fuck-all in that sense. Might as well be trading beanie babies for all it means to Exxon Mobil's operations.

[Jon H]

Harry wrote: " Companies are simply just the means of aggregating the capital of individuals towards a common enterprise"

You're missing the key point, Harry. Corporations exist to shield those investors from personal risk that the company will, say, gas half of Bhopal.

If Corporations don't want to pay taxes, they can become partnerships. In which case, the owners *do* carry the personal risk. Just look at what happened to the partnership known as Arthur Andersen, after they got involved in the Enron scandal.

Now, choose, Harry. Which would you prefer? To risk ending up at the pointy end of a lawsuit along with all your fellow investors? Or to have the companies you invest in pay taxes for the privilege of shielding you from liability?

[Too Much Fed]

Linda said: "Bush's tax cuts have saved me "a few hundred dollars" every year and that has been quite significant to me."

Could you be more specific about which ones?

What if just the income and dividend and capital gains taxes were raised for only those making more than $200,000 a year?

How many retirees are making more than $200,000 a year?

[Roger]

Dean Baker's argument is entirely unpersuasive, and even gets the historical relationship between government and capitalists backwards. The simplest answer to the double taxation argument is that individuals are earning income from this speculation and the tax rate of corporations is not high enough in general to cover those earnings. Why? Because however appealing it is to capitalists to minimize their taxes, historically they came to realize that it's neither politically nor economically feasible to give speculators a free ride.

[Harry Tuttle]

The arguments seem to be that double taxation is the price to be paid for the limited liability of companies and protection from criminal prosecution.

Companies don't commit criminal acts, individuals do. Legal sanctions apply to individuals, even if they are acting on behalf of companies.

It makes no sense to think that investors can be criminally liable for the companies they invest in, if they didn't order the criminal acts.

Double taxation increases the cost of capital and discourages companies from paying dividends. If individuals commit criminal acts, prosecute them. Don't, however, place an extra tax on investment.

[Ryan]

From an investor/entrepreneur's perspective a corporation, even with double taxation, is often preferred to a partnership or other structure with full liability. In that regard, Baker's interpretation, of dividend tax as could the price for limited liability, isn't completely odd. With that said, I’m sympathetic to no business tax whatsoever.

[Linda]

Too much Fed:

My comments applied to the current rates on "qualified" dividends and capital gains, primarily the former. I guess I've also benefited from reduced marginal income tax rates, as have most taxpayers, but that wasn't the topic.

I have no idea how many retirees make more than $200K, but I'd hazard a guess and say it's a small % of retirees.

My points were that 1) not everyone fits the stereotypes concerning who earns what kind of income, and 2) Blissex's proposal made sense to me because, in effect, it enhances or reinforces progressivity in how dividends are taxed to the recipient.

In addition, I'd add that given a choice between adding to the debt future generations will be on the hook for and paying more in taxes, I'd choose the latter.

You have a point to make, so go on, let's hear it.

[Real Person from the Real World]

BTW people, keep in mind that it isn't just Fed taxes. My income is so low, I generally pay no federal tax, even on dividends, but state tax does take a toll. While my income is low, I keep hoping for a better job with benefits and health, but I still have some stock, and the capital gains tax can be a nightmare for both fed and state when you held something for a long time and changed brokers or bought on a DRIP. Even today, with all the computerization, I am not sure companies will work out the tax basis for a DRIP holder, yet DRIPs are the poor man's way of accumulating stock, or rather getting a decent interest rate. Not too long ago, my dad lived his last years on a combination of utility stock dividends and appreciation on the utility stocks to suppliment his pension and pay his medicare supplement insurance, despite having bought an executive health program that just dissolved and became worthless as the company was bought and sold. You cannot just depend on income from one source - true then, and even truer today.

[Real Person from the Real World]

Bottom line, taxes do matter, even a few hundred dollars, to someone struggling to make ends meet. It is the fear of being taxed that drives many to republican candidates, despite the fact that the republicans have spent recklessly on endless wars that have not provided any benefits to the tax paying public, and fuels hate against the US by propagandists overseas.

[Real Person from the Real World]

P.S. all while the US's infrastructure is falling apart. The Republicans think that some corporation will fix a road so employees can get to work? LOL. Market solutions are not always best.