Olympia Snowe’s proposal for a dividend tax exemption is one that I can support, if my choice was hers or the current President’s proposal.
My opposition to the dividend tax as initially proposed is simply that it rewards those who have already been more than adequately compensated. If we take a look at the 2002 Citigroup Proxy Statement regarding stock ownership, we find that CEO Sanford Weill owns 22,777,290 shares of stock. At $0.80 a share, he would pull in the full $18,221,832 every year tax-free. Considering his current salary, additional perks, bonuses, and stock options, he is far from living the “poor life”.
On othe other hand, I currently own 130 shares of Citigroup stock, which would net me $104 in dividends prior to taxes. Excluding taxation, I would tax home an additional $40, which might buy myself and some friends dinner at an inexpensive restaurant. In addition, most of the rest of my dividends from investments, like many other middle class wage-earners, occur in tax-exempt accounts such as IRAs and 401ks, that would not be assisted by this proposal.
Capping the exclusion at $1,000 would ensure that most individuals would receive some tax-free income, while not creating a new loophole for corporate greed (restricted stock while emptying the coffers through dividends, anyone?).
Besides which, the oft-cited-yet-wholly unlikely stimulus effect was found to be bogus, even using the GOP’s favorite method of dynamic scoring. The Congressional Budget Office (CBO), responding to criticism that the deficit projections don’t accurately reflect their stimulative impact, ran a set of models to try to determine their impact. The end result–the current tax cut plan, which includes an exclusion for dividends from taxation, provided no long term benefit to the economy (in fact, they did worse, causing the 2014 deficit projection to be higher).