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December 2, 2014

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review December 14, 2012/ 1 Teves, 5773

Dividend Tax Folly

By Linda Chavez



http://www.JewishWorldReview.com | While Washington pols pose and posture on whether to raise taxes next year, American businesses are busy taking action to avoid the hit their shareholders are likely to take come January. It's an old lesson that liberals never seem to learn. No matter how clever the tax hikers think they are, those who stand to be hurt by higher taxes usually figure out a way to protect themselves.

The Obama administration hopes to raise more revenue by allowing the top tax rate to rise to 39 percent (or 43.4 percent if you include the new tax to pay for Obamacare) on those small businesses and individuals earning more than $250,000 a year. But it also intends to hike rates on long-term capital gains and dividends, which are now taxed at a rate of 15 percent regardless of the income of the taxpayer. The dividend rates will revert to ordinary income tax rates, a more than 250 percent increase even before the Obamacare taxes are included.

The rationale for lower tax rates on investment income is sound. First of all, individuals who have chosen to invest their own money by buying stock have already paid individual and, often, payroll taxes on the money they use to do so, and the corporation pays taxes on the profits it earns as a result of that investment. When the shareholder sells the stock at a profit, or receives a dividend based on the company's earnings, that money has already been taxed twice.

More importantly in the case of capital gains, taxing long-term gains at the same rate as ordinary income provides a disincentive for investors to invest for the long haul. The result is that there is less capital available for businesses, which lowers long-term economic growth.

But the administration is only interested in raising more revenues, any way it can. The problem is, it won't work.

Here's why: Companies are already protecting their investors by issuing special dividends and paying out regular dividends early to help them avoid rate hikes next year. The Wall Street Journal posts daily the companies that are making early and special payouts, which will be taxed at the 15 percent rate if they are earned in 2012. The list, now in the hundreds, is a virtual Who's Who of top businesses: Caterpillar, Cisco, Dillard's, Oracle, Wal-Mart and Walt Disney, to name a few. And it includes several "progressive" companies whose executives supported President Obama in 2008 and 2012.

Costco's co-founder, former CEO and current board member Jim Sinegal, is a case in point. As the Journal reported, Sinegal went on the campaign trail in 2012 for President Obama to argue for higher taxes, but he and his fellow Costco directors figured out a way to protect themselves and their shareholders. The Costco board recently voted to approve a special $7 per share dividend to be paid to shareholders in December to avoid paying higher taxes next year. (In the interest of full disclosure, I, too, supported moving up the payout by a few days for a regular quarterly dividend for a public company on whose board of directors I serve.)

There's nothing wrong with what Sinegal and a host of others have done (though one might question whether Costco's decision to borrow $3.5 billion in order to award the special dividend is wise.) These companies are making decisions in their shareholders' interests — and that is exactly what they are supposed to do. In the case of corporations, the money involved is the shareholders' — no one else's. And directors' fiduciary responsibility is to maximize shareholder profit in a lawful and prudent manner.

But liberal policy makers never seem to understand the human instinct to protect and preserve what one has earned. They think that if they raise rates higher, revenues will increase automatically. What liberals never fully anticipate is that their decisions will change behavior in ways that will thwart liberal objectives. If long-term capital gains tax rates will increase next year, individuals have an incentive to sell now and pay lower taxes. If taxes on dividends will go up dramatically, corporations have an incentive (maybe even a duty if they're sitting on a lot of cash) to pay out those dividends early so that they'll be taxed at the lower rate.

If President Obama had ever spent one week working in the real economy, he'd understand this. But he's too obsessed with soaking the rich to figure out that we can never tax our way to prosperity. We're far better off trying to control government spending as a way to avoid the fiscal crisis ahead than to think we can avert disaster by waving the tax-hike magic wand.

Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.


JWR contributor Linda Chavez is President of the Center for Equal Opportunity. Her latest book is "Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics". (Click HERE to purchase. Sales help fund JWR.)

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