Double Taxation of Dividends - A Long-Running Republican Scam.

The Bushies have pounded this poor dead animal for as long as Dubya has been in office. Dividends should not be taxed twice, they say. Well, they're not...never have been, and if the tax is removed from dividend income, Bill Gates will have more gold poured up his butt than the law should allow.

Allow me to present two examples. Alice Investor owns 10,000 shares of Microsoft common stock. The stock has just recently paid a dividend. (It would be underhanded of me to suggest that Mr. Gates instituted a dividend because he had pretty good knowledge that taxation of dividends would be ended by this administration, but I'll suggest it anyway.) After four quarters of dividend checks, Alice has received a yearly dividend income of $10,000. She is required to pay income tax on this, at the rate of 15 percent. (Pretty good rate, actually. Other income is taxed up to a maximum of 43%).

But Alice pays her $1500.00. Does this income belong to Microsoft? No, it belongs to Alice. Microsoft has already paid corporate taxes on its income for the year, {assuming the company is honest enough to indeed pay corporate income taxes.) The fact that Alice has to pay income tax on it is no way double taxation of dividends. Microsoft was taxed on its income. Alice is taxed on her income.

This should be simple for any literate person to understand, but then Dubya doesn't read much.

Example number two. Bill Gates owns gazillions of shares of microsoft common stock. After his company pays its annual corporate income tax, Bill receives ten million dollars in dividend income from his stockholdings. He has to pay a million and a half dollars in dividend income tax. Wait, he says. Microsoft has already paid taxes on this money. This is double taxation of dividends and vastly unfair. Why supposedly educated people buy off on this scam escapes me. Bill Gates and Microsoft are two separate entities. That is why corporations are formed. Microsoft paid corporate income tax and Bill Gates has to pay income tax on his dividends. The income no longer belongs to Microsoft, but to Bill Gates.

If dividend taxes are eliminated, Alice Investor saves $1500., not an inconsiderable sum, but thousands of other microsoft stockholders will save much, much less. Bill Gates saves a million and a half. Rush Limbaugh, Sean Hannity, Michael Medved, Ann Coulter, Cal Thomas and other far right hoo-hoos see nothing wrong with this. It's enough to make any intelligent person slightly sick.

The figures cited in the above examples are for illustration only, which should be obvious.

My name is Carl A. Group carlgroup@msn.com . I am a retired USAF LtCol, 79 years old, as well as a retired financial advisor of 28 years experience. I am married to the same woman for 51 years. We are both in robust health and travel widely, mostly on cruises. We have four grown children and eight grandchildren. I consider myself a raconteur, bon vivant, gourmand and general all around renaissance man. political labels offend me. I am an American. I respect critical thinking, intelligent discourse and friendly disagreement. I suspect rigid ideology, religious orthodoxy, governmental secrecy and oppression. I think George Bush is a liar and a knave, a person who never had to strive to accomplish anything. He does not deserve the office he holds and I fervently hope he is voted out in November.