State of the Union, 2003

[Mr. Irrelevant]

I'll swing this thread back to the tax plan Bush laid out. Just for a minute....

Chawbein,


Although I do have some significant (to me significant) cash in the stock market, in the tens of thousands of dollars, at my age, 34, I'm not invested in stocks and funds that pay out high dividends.

This plan will only provide instant cash to those people with a tremendous amount in the market in liquid assets, I'm talking into the hundreds of thousands and/or invested heavily in dividend paying stocks. I have no need for the income that is provided by mature, high dividend paying companies. I think this would best help older investors (and the very wealthy who own more than I can imagine at this time) who use these types of companies not only for the equity exposure but to augment their retirement income. Not to mention it will kill the municipal bond market which is attractive to those who are tax-averse but won't be much more stable than most mature corporations past their growth stages that pay those high dividends and whose popularity should go thru the roof if this passed (which it won't).

Again, I agree with the theory that we should not be double taxed but a complete wipe out with one signature isn't the way to go. Possibly a 10% cut this year, 10% next, etc. Then a major push for income tax cuts for people in the 35k-100k range. I'd be all for that. I think there is a law of diminishing returns after a certain income level. I think some people will spend more but others will just sock the cash away. The income range I specified would probably spend most of the cash used in the income tax cut to improve their quality of life in some way, hopefully significant.

And by the way, although I make a decent salary, I live in a part of the country where 50k+ doesn't take you very far. Obviously it is all relative. Thanks for your input.

To those who blame Clinton for 9/11, get over it. Leave the guy alone. Bush had 8 months in office prior to 9/11 and didn't prevent 9/11. It certainly isn't his fault in any manner. I think Bush has done a great job on the terrorist front (except for the TSA not profiling). Incredible that so many pilots here like to throw Clinton under the bus for those attacks though.


Mr. I.

 

[TXCAP4228]

DMS, I just want to make sure I understand what you're saying.

You are saying that Bush (being the big oil man that he is, wink, wink) is diverting money from R&D that would otherwise have been used for 80 miles per gallon cars and sending it to hydrogen car research that will wind up being unfeasible and cancelled. And you're saying he is doing this to protect the oil companies from 80mpg cars?.

Yeah. Kennedy REALLY proposed the moonshot so that we could mine all that green cheese up there - he had stock in green cheese exploratory companies you know. Wink, wink.

I'm with you bro. They almost had me sold that they were trying to HELP the environment, but I see now that its all a big conspiracy. We've sure got these guys figured out - those b@stards sure are sneaky aren't they?

 

[dmspilot00]

I have driven about 400 miles a week on interstates for the past two years on my way to school. I don't think there are radiological shipments every few minutes. I've only seen one in my entire lifetime. If there are, it is probably low-level waste such as exposed clothing, etc. The nuclear waste itself is another story. "Nuclear waste is recognized as the most dangerous substance known to humankind...it can deliver a lethal dose of radiation within seconds."

If you think there are already a lot of shipments, then consider when the Yucca Mt. site is ready, it will mean a thirty-fold (3,000%) increase of shipments. There have already been at least 8 accidents which caused leaks and contamination of roads or rails. When the Department of Energey itself projects over 300 accidents I think that is cause for alarm.

Edit: Additional information:
Over the past three decades, there have been an average of 90 shipments per year of the same type of high-level nuclear waste. When Yucca Mt. opens there will be 2,789.

---

I am glad to see progress being made on hydrogen powered vehicles, but I don't think we should throw away years of research and money that was spent on ultra-high mileage gasoline powered vehicles either.

 

[dmspilot00]

DMS, I just want to make sure I understand what you're saying.

You are saying that Bush (being the big oil man that he is, wink, wink) is diverting money from R&D that would otherwise have been used for 80 miles per gallon cars and sending it to hydrogen car research that will wind up being unfeasible and cancelled. And you're saying he is doing this to protect the oil companies from 80mpg cars?.

Don't put words in my mouth. I am not a psychic and can't possibly know what W is thinking. One possibility as presented in the article I cited is that it's the car companies who have persuaded Bush to forget about MPG. We don't know the whole story and I'm convinced much of what Bush does [and many politicians] is for the main purpose of looking good.

 

[TXCAP4228]

I'll swing this thread back to the tax plan Bush laid out. Just for a minute....
Although I do have some significant (to me significant) cash in the stock market, in the tens of thousands of dollars, at my age, 34, I'm not invested in stocks and funds that pay out high dividends.

There are not a low of stocks that pay out divedends today for the very reason that they do not provide that much return to the investor. If the double taxation scheme goes away then that will change. Imagine earning a return off of investments that is not dependant on the stock value. It would be more like earning interest in a bank acount at that point. More below.

This plan will only provide instant cash to those people with a tremendous amount in the market in liquid assets, I'm talking into the hundreds of thousands and/or invested heavily in dividend paying stocks. I have no need for the income that is provided by mature, high dividend paying companies. I think this would best help older investors (and the very wealthy who own more than I can imagine at this time) who use these types of companies not only for the equity exposure but to augment their retirement income.

You should also consider a couple of things. In the current market, stock prices are extremely volatile based on earnings estimates and other news. Without the double taxation scheme, companies could provide value to stockholders in other ways. The net result would be to disconnect the state of the economy (which today directly affects the equity markets) from day to day market fluctuations.

When that happens, the market becomes more stable.

Other benefits from that are that more and more companies will begin to pay divedends, increasing net yields to investors. And THAT helps EVERYONE who has any kind of retirement plan, pension fund, 401K, IRA or ANYTHING.

You are right that the it will take 2 years or more to really have an impact but it could be huge.

Not to mention it will kill the municipal bond market which is attractive to those who are tax-averse but won't be much more stable than most mature corporations past their growth stages that pay those high dividends and whose popularity should go thru the roof if this passed (which it won't).

It will not kill the muni market. It WILL however provide investors with more choices for retirement planning. I am FOR choices.

Also, In order to defend your position on this you have to defend the double taxation scheme.

Again, I agree with the theory that we should not be double taxed but a complete wipe out with one signature isn't the way to go. Possibly a 10% cut this year, 10% next, etc. Then a major push for income tax cuts for people in the 35k-100k range. I'd be all for that. I think there is a law of diminishing returns after a certain income level. I think some people will spend more but others will just sock the cash away. The income range I specified would probably spend most of the cash used in the income tax cut to improve their quality of life in some way, hopefully significant.

Timebuilder may have said before that ALL types of double taxation schemes are wrong - from taxes on divedends to taxes on estates. I agree with that. If we can say in principal that its wrong, let's do away with it now.

To those who blame Clinton for 9/11, get over it. Leave the guy alone. Bush had 8 months in office prior to 9/11 and didn't prevent 9/11. It certainly isn't his fault in any manner. I think Bush has done a great job on the terrorist front (except for the TSA not profiling). Incredible that so many pilots here like to throw Clinton under the bus for those attacks though.
Mr. I.

I agree that it isn't Bush's fault but let's look at Pres. Clinton for a moment. Khobar towers, WTC attack#1, embassy bombings in Africa, the USS Cole. How many times did we have to be attacked before WJC (WJC is how the deposition transcript refferred to him) actually did something. The Clinton administration was AWOL. Perhaps criminally so. I'm sorry some of you don't like to hear it.

 

[Mr. Irrelevant]

TXCAP,

I appreciate the reply but I don't see it as you do for the most part. Although I agree that the number of dividend paying stocks is low I don't believe that many companies will begin providing much in the way of new dividends. Maybe some but I'm talking about issuing a .05 cent dividend, something along those lines.

I believe very few companies will start paying dividends for two reasons;

1. Once a company has started paying, the market looks very unfavorably on the a cut. Same reason for dividends being newly issued or increased by very small amounts.

2. Most companies will want to use that cash to spur growth in the corporation. Very few executives realize when their companies are in their mature stage and not growing any longer. I doubt they'll start throwing out divs when they can try out that new venture they've always had ideas about.


As for the markets volatility, I don't think possible div payouts have anything to do with it. Inaccurate earings forecasts, earnings surprises and the excess cash that has been thrown into the market the last 10-15 years (particularly from retirement accounts) I believe causes the volatility we see today.


Hey, I'm with you and Timebuilder I just disagree that one signature should completely wipe out $300 billion in taxes. Thus my suggestion for a gradual phase out.

Although I'm pro-"go get Saddam", the combo of funding the war and throwing in the tax cut is going to hurt at some point. I have no doubt it should force a raise in interest rates when the govt. has to issue debt to pay for these actions. I'm sure that tax revenues will increase as the economy comes back but I'm not sure how much it will cover of our debt in the future.

Regardless I don't think this plan is going to make it thru the senate and house anyway.


Mr. I.

 

[Timebuilder]

This is one of our better discussions.

This afternoon, Rodger Hedgecock mentioned what TXCAP4228 mentiond above. A lot of market volitility has come from the idea that only capital appreciation is the way to benfit from investing; the old "buy low, sell high" game. When people invest in the companies that pay dividends, a great many more companies will begin to pay dividends, in order to KEEP THEIR INVESTORS!!

If we give tax relief to those who pay the vast majority of taxes, what Tom Daschle refers to as "the rich", then we will see a tremendous growth in the economy, and a rush to dividend-paying companies. Daschle's idea of "targeted tax cuts" will give people enough money to buy a washer and dryer, or a rebuilt transmission. On the other hand, if we reduce the top margin for our largest taxpayers, that money goes into hundreds of American companies, the ones that employ the rest of us.

From the government side, we already have seen that a reduction of the top taxpayer's margin actually INCREASES the money that comes into the treasury. This why it is a lie when Daschle says that a tax cut will "cost money". Quite the opposite, it will create economic value, in real dollars.

The worst part? Daschle KNOWS it is a lie. So does Hillary, Check Schumer, and the whole bunch. They just can't resist playing the "class warfare" card. So sad.

 

[TXCAP4228]

TXCAP,

I appreciate the reply but I don't see it as you do for the most part. Although I agree that the number of dividend paying stocks is low I don't believe that many companies will begin providing much in the way of new dividends. Maybe some but I'm talking about issuing a .05 cent dividend, something along those lines.

I believe very few companies will start paying dividends for two reasons;

1. Once a company has started paying, the market looks very unfavorably on the a cut. Same reason for dividends being newly issued or increased by very small amounts.

2. Most companies will want to use that cash to spur growth in the corporation. Very few executives realize when their companies are in their mature stage and not growing any longer. I doubt they'll start throwing out divs when they can try out that new venture they've always had ideas about.

You make some good points.

1) The market has in recent times looked unfavorably on paying divedends because the better way to increase shareholder value was (/is) from the pure equity approach - ie, increase the share value.
2) You are correct with number 2, but I think that long established and mature companies may begin to do this as an alternative way to increase shareholder returns without the risk of expaning operations into new areas.

As for the markets volatility, I don't think possible div payouts have anything to do with it. Inaccurate earings forecasts, earnings surprises and the excess cash that has been thrown into the market the last 10-15 years (particularly from retirement accounts) I believe causes the volatility we see today.

This one took me a while to really "get." The idea is that if you tie a stock' desirability to something other than the share price going up or down, then you have done something to allow it to continue to be of value to a stockholder in spite of economic swings (and all things that cause daily and seasonal market fluctuations) then the market will tend to be more stabalized. Sort of like yaw damp?

The net effect is that the economy will not be so closely tied to direct market equity.

Like I said, it took me a week or two to really digest that but it makes a lot of sense to me.

Hey, I'm with you and Timebuilder I just disagree that one signature should completely wipe out $300 billion in taxes. Thus my suggestion for a gradual phase out.

On this you have a good point. The only really good counter I had when I responded yesterday was to say that if is that if its wrong we just shouldn't do it. I realize that's kind of weak so I thought of something else too (I am surprised I didn't thin of it before). By increasing returns to the investors you increase what can be reinvested. Most pension plans and mutual finds (401K plans etc...) reinvest divedend earnings. This is good for the economy.

There will be a lag time for this to take hold but I think it will.

Although I'm pro-"go get Saddam", the combo of funding the war and throwing in the tax cut is going to hurt at some point. I have no doubt it should force a raise in interest rates when the govt. has to issue debt to pay for these actions. I'm sure that tax revenues will increase as the economy comes back but I'm not sure how much it will cover of our debt in the future.

The "end of deficits" that Clinton claimed in the late 90's was purely a result of predicting the economy would grow at X rate forever. This was never realistic, but how do you argue with it? Most people would never really be able to follow that lines of thought, and most wouldn't care to anyway.

Anyway, that is a preface to saying that we really were going to get back to deficits at somepoint regardless because spending is still not under control. For me, the cost of waiting for the war outweighs the short term economic cost. We have let Sadaam have a pass for too long and now we have to face the music....

I still haven't gien up hope that he will abdicate and self exile himself but we'll see.

Regardless I don't think this plan is going to make it thru the senate and house anyway.
Mr. I.

I actually think it will.

Timebuilder is right, this is a great discussion.

 

[TXCAP4228]

This is one of our better discussions.

The worst part? Daschle KNOWS it is a lie. So does Hillary, Check Schumer, and the whole bunch. They just can't resist playing the "class warfare" card. So sad.

It is sad. This is why I get so disgusted with the obfuscation and disingenuousness of the left. My own party isn't perfect, but no conservative ever goes out and LIES directly to a camera in a way that is intended to persuade those who only follow the news enough to get the "sound bite".

Look at Chuck Schumer submitting a bill to reinstitue the draft! Its ABSURD, and its 110% political! Purely for shock value, to SCARE people.