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<blockquote data-quote="stocker08" data-source="post: 7921159" data-attributes="member: 577940">No, I get that logic.&nbsp; In some ways it makes sense, but there are some major distinctions.&nbsp; Corporations are not simply a pass through entity from the market to the individuals.&nbsp; Do the Corporations get taxed, of course.&nbsp; But they also are offered all sorts of rights and protections not offered to individuals.&nbsp; One main reason for the dividend tax, is because otherwise it would be one more tax-free source of income for the richest folks in america.&nbsp; The largest portion of shareholders in dividend paying companies happen to be trusts whose beneficiaries are the descendents of company founders.How about the unintended consequences of tax-free dividends?&nbsp; Executives giving themselves bonuses in the form of shares producing tax-free dividends.&nbsp; This could encourage corporations to pay out larger dividends at the expense of the corps long term outlook.&nbsp; Let&#039;s keep in mind, dividends are voluntary.&nbsp; So what would a corporation do to make their share prices go up?&nbsp; They could pay large voluntary dividends to drive demand in favor of their shares.&nbsp; Earnings growth should drive stock prices, not the promise of temporary high dividend payments.</blockquote>

[QUOTE="stocker08, post: 7921159, member: 577940"] No, I get that logic. In some ways it makes sense, but there are some major distinctions. Corporations are not simply a pass through entity from the market to the individuals. Do the Corporations get taxed, of course. But they also are offered all sorts of rights and protections not offered to individuals. One main reason for the dividend tax, is because otherwise it would be one more tax-free source of income for the richest folks in america. The largest portion of shareholders in dividend paying companies happen to be trusts whose beneficiaries are the descendents of company founders. How about the unintended consequences of tax-free dividends? Executives giving themselves bonuses in the form of shares producing tax-free dividends. This could encourage corporations to pay out larger dividends at the expense of the corps long term outlook. Let's keep in mind, dividends are voluntary. So what would a corporation do to make their share prices go up? They could pay large voluntary dividends to drive demand in favor of their shares. Earnings growth should drive stock prices, not the promise of temporary high dividend payments. [/QUOTE]

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