26 million American taxpayers would receive an average tax cut of
$704 in 2003 as a result of the provision to eliminate the double
taxation of dividends in the President's jobs and growth plan.
Today's Action
The House Financial Services Oversight Subcommittee will hold a
hearing this afternoon to discuss the President's jobs and economic growth plan - especially the provision to eliminate the double taxation of dividends - and the impact it would have on America's investors and U.S. capital markets.
The dividend provision would have far-reaching effects - higher stock prices, improved investment, increased job creation and higher wages - that would generate broad benefits throughout the economy and help Americans of all income levels.
In an op-ed last week, Charles Schwab, who has been working with investors for more than 40 years, predicted that he would "expect to see the stock marked rise 10 percent to 15 percent" in the short term as a result of ending the double taxation of dividends. He also stated that he "can't think of any other tax policy that would, at one stroke, be more beneficial to ordinary investors." (The Washington Post, 3/11/03)
Over a quarter of all income tax returns report dividend income
and over 40 percent of all these returns have incomes of less than $50,000 per year. Currently, if a family owns 200 shares of a $50 stock with a 3% yield, they receive $300 in dividends from those shares each year - but they may be able to keep less than $185 of that because the current tax law unfairly taxes dividend income twice. Eliminating the double taxation of dividends would allow such families to keep another $115 of their earnings to spend as they see fit.
The President's plan would also help improve investor confidence in the wake of corporate scandals. If a company pays regular dividends, investors will have checks in their hands and can be confident that profits are real.