DIVIDENDS PAY

September 16, 2008
Michael Sheehan

Physician's Money Digest, May 15 2003, Volume 10, Issue 9

The Bush plan to eliminate taxeson dividends may not see the lightof day, but many financial gurus arewelcoming the attention that thedebate is focusing on dividends.When Wall Street brokers crowabout historic long-term returns onstocks, these experts say, they oftenignore the fact that the bulk of thoseprofits came about through reinvesteddividends. Eliminating thetax on dividends would give companiesan incentive to fatten the walletsof their investors through dividendpayouts instead of stock priceincreases. As long as profits onstocks are taxed at a lower rate thandividends, critics say, the emphasiswill be on pumping up the stockprice, and it's often tempting to dothat by using unethical or outrightillegal accounting practices.