I don’t talk about politics much because, frankly, it’s too much for my little mind to fully comprehend, and a little too boring for me to study up enough to make my informed opinion public. So this whole Bush economic stimulus plan is blowing my mind. The main argument against is the repealing of the dividend tax and how that benefits mostly the rich (i.e. not me). I’ve also heard it said that even though it’s a $600 billion plan, only $50-60 billion tops would find its way into the economy this year. I’m starting to confuse myself now, but The Motley Fool had an article on it that I found interesting. A few choice tidbits:
“Forget the “tax break to the wealthy” rhetoric — the IRS’s own sources show that American households claiming income of less than $50,000 had dividend income of $26.9 billion in 2001, while those reporting income above $1 million had dividend income of $25.4 billion.”
“A June 1995 study from the National Bureau of Economic Research tracked the behavior of the same taxpayers before and after the marginal tax-rate cuts passed in 1986. Those who received the biggest rate cut “had the biggest behavioral response.” Translation: They spent more, generating economic activity and tax generation in other ways, offsetting the original loss in revenues for the government.”
“Bush’s proposal would offer some crucial benefits. First, Americans will have a greater incentive to invest. If you’ve ever done a compounding return scale, you’ll see that an individual’s overall return can be exponentially higher over a lifetime based upon seemingly tiny year-to-year differences.”
