On Tue, 7 Jan 2003, Daniel Davies wrote:
> If you want to get rid of double taxation on a revenue-neutral basis
Daniel, I've never understood this point. It seems to me that, theoretically, the revenue-neutral problem has nothing to do with double taxation -- it's caused by single taxation. That is, the fact that the corporation pays tax on money it declares as profit (as in dividends) but not on the same money if it does other things with it, like plow it into the business, means that it is encouraged to do one thing rather than another by factors over and above the intrinsic economic cost benefit balance. And specifically it's encouraged to do something other than pay dividends even if that is "objectively" the best use for the money.
But if you removed the tax that corporations pay on money declared as dividends, that would seem to fix the problem *regardless* of whether the recipients are taxed on it. So theoretically, if you untaxed the dividend recipients, but the corporation still paid tax on them -- in which case the money in question would be now be single taxed -- you'd still have the revenue neutrality problem in all its pristine glory.
So what am I missing?
I have lots of other questions too, but I suspect any misunderstanding I have on this point would affect everything else I think.
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com
"Some one has observed that Providence is always on the side of the big dividends," remarked Reginald.
The Duchess ate her anchovy in a shocked manner, she was sufficiently old-fashioned to dislike irreverence towards dividends.
-- Saki, "Reginald at the Carlton," from _Reginald (1904) __________________________________________________________________________