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The Phony Dividend Tax Cut


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For several weeks, we've been hearing about the great dividend tax cut. In principle, it could be implemented by inserting the single word "dividends" in existing tax code sections that provide for the deduction of interest and other business expenses.

 

But no. Nothing is ever simple in the byzantine world of politics. Now Bear Stearns has revealed that complicated rules make dividends tax-free only when paid out of profits that were federally taxed two years prior. Companies that utilize foreign tax credits, or had losses in prior years, or who are incorporated overseas, may not qualify. The author of the study, Patricia McConnell (who taught machinehead what little he knows about accounting in her course at NYU) found that only 11 of the 30 Dow companies would be able to pay fully tax-free dividends.

 

The Dividend Shell Game

 

Sad, and sadly typical. Cultural imperatives require politicians to ritually bemoan the abusive complexity of the tax code. But when the rubber meets the road, new wrinkles are always added to provide lifetime employment for accountants, auditors and tax lawyers. Watch what they do, not what they say.

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Really means that the returns are audited, or could have been audited before the $$ is distributed. Just my humble accounting eyeball of the rule.

 

Dividends are cash, and can't be proforma, can't be fudged. They are the really true return of the common investor.

 

I have also read a separate 'rule' considered that allows the taxpayer/holder of the stock to increase their basis (increase the cost, decreases profit when sold) of a stock that does not pay a dividend. This would amount to 'retained earnings' being treated as an undistributed dividend. Appears a bit convoluted to me.

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sov.er.eign also sovran 1 a: possessed of supreme power b: one that exercises supreme authority within a limited sphere.

 

tax free is easy..........don't make any money, unless you're using a duplication process of course. :lol: Of course any money you spend is taxed again by one method or another.

 

invisible is a lot tougher in this digital world. Dead people are pretty much invisible as long as they don't use their Master Card. Makes it a little tough to collect Social Insecurity, not impossible, just harder. :P

 

I'll assume you're going for definition b above, since going for a is something no sane (or earthly) person would really want, no matter how tempting the offer.

 

I can only think of one place on the continent that would allow (not necessarily legally, but functionaly) a person to live as described above, but it would mean sacrificing most of the modern world to achieve and travel would be inconvenient.

 

Perhaps you have discovered Nirvana off continent? If so, I would be interested, as I'm sure other like minded stoolies would be also.

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"Dead people are pretty much invisible as long as they don't use their Master Card. Makes it a little tough to collect Social Insecurity."

 

Indeed it does. There's a searchable Social Security Death Index (SSDI), instituted in 1962, which reportedly has over 60 million names, DOBs and SSNs on it. But over 400 MILLION SSNs have been issued since the inception of the program. And there's a mathematical limit of 999,999,999 unique numbers with only 9 digits.

 

It would strongly appear that some people have multiple SSNs. But they had better not be numbers which have been 'retired' to the SSDI, because those don't compute when new 'contributions' are credited to them.

 

Meanwhile, a Google search with "SSN" as a keyword will turn up numerous valid SSNs. Many are in state-published lists of sex offenders. Apparently part of their punishment consists of being set up for identity theft (not that you'd want to steal an identity with a rap sheet). Others are missing persons. Still others are in resumes ... good-hearted souls who naively expose their personal info to the world.

 

Search engines are like an automated Delphic oracle. Even oddball combinations of keywords can produce mysterious and arcane information. With the right keywords, we could discover the secrets of the universe.

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