I’ve been sitting and reading the news and listening to the debate on the "Economic Stimulus" package that Bush has proposed in the US for the last couple of days. Whatever else the package means, it’s clear to me that I should never have left the US. Whew, what a windfall! No more dividend taxes, and the 10% tax bracket just got cranked up to a higher income maximum, and the top bracket drops to 35%.
It’s not clear to me at all, though, that eliminating taxation of dividends will have any effect on the US economy. Dividend paying stocks tend to be held by conservative, retired, investors or held in retirement portfolios (401K’s, and the like). Will eliminating taxation on these suddenly cause investors to go out and spend the money? Not likely, in my opinion.
Will Canada have to respond? Perhaps… some of the pundits are saying that eliminating dividend taxes makes it more attractive for companies to locate themselves in the US. But until we see some evidence that this is actually happening, I’d be keeping my powder dry…
Here’s a selection of the coverage, from all angles.
- What is the Bush plan trying to stimulate? The Globe and Mail
- U.S. tax cut puts heat on Ottawa The Globe and Mail
- Keep pace with U.S. tax cuts, Ottawa told. National Post Online
- Tax Abolitionists Washington Post
- The Long and Short Of the ‘Stimulus Package’ Washington Post
- The Wrong Stimulant New York Times
- President proposes big tax cuts for individuals International Herald Tribune
- The Charles Schwab Tax Cut New York Times