Quote:
Originally posted by Night Stalker:
About 20% IIRC. Note though, some people use dividends as income! The dividend tax is a double tax on the same dollar for the same thing.
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I've explained to MagiK before that it's not a double tax. A dividend is ONLY taxed to you, the stockholder, as income, if the corp. pays you a dividend, it is your income. Now, the corp must pay a tax on its income as well. The system is "transactional" like the sales tax.
If you make $20K this year, you pay income tax on that. Now, if you spend $2K on a laptop, the store gets taxed for that amount as income. That's not "double" taxing. "Double taxation" is a term of art artfully created by businesses to make you think you're being cheated when you aren't.
This "double taxation" is the only price you pay for the
entity liability wall between you and the company. Because the company is a different
entity (meaning: "legal person"), you are only on the hook for the amount of money you have "bet" on the company (defined by your stock holdings). Otherwise, your home and life savings would be on the line if a corp. you owned stock in went bankrupt. The liability wall is VERY powerful. But, also, because the company is a different entity, you pay a price -- there are two transactions when it makes money and then pays you that money.
If you want to avoid double taxation, form a partnership, S-corp, or LLC (closely held "small business" corp) -- those all get taxed as partnerships (i.e. "pass-through" taxation) because the liability wall is not absolute. These also are the reason why such "double-taxation" concerns DO NOT affect small business owners.
Nixing dividend taxes is a sham. Bushie-boy spouts and sputters about retirees when he's in the pulpit, but it's really about Harken and Halliburton stock for the rich blueblood club.
Oh - and you'll note that 20% is the very low tax rate that Capital Gains also get taxed at. (Actually, I suspect dividend tax rates are higher, and may simply be your income tax rates.)
[ 05-13-2003, 06:30 PM: Message edited by: Timber Loftis ]