A dividend tax is an income tax paid on the earnings from a corporation that is distributed to its shareholders. Dividend payments are treated as ordinary income, and they are taxed as if the taxpayer had earned income through active work. Presently, there is much controversy surrounding the tax. The government taxes dividends twice: It first taxes corporate income, then taxes the same income again when shareholders receive dividends paid out of corporate income. Which is a “double taxation”( http://pages.stern.nyu.edu/~byeung/dividend%20taxation.pdf). The double taxation raises the questions of whether the tax should be eliminated, and which taxes should be cut. With both sides ..., the dividend tax … because…,
The dividend tax was introduced in 1936 by President Roosevelt in the New Deal (Levey). The Economic Growth and Tax Relief Reconciliation Act of 2001 introduced lower dividend tax rates(NATP 2001). On May 23, 2003, President Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003, which gained momentum to passing the tax changes, and was supposed to expire in 2008(NATP 2003). Then on May 17, 2006 the reduced rates were extended an additional two years by the Tax Increase Prevention and Reconciliation Act, into 2010(NATP 2005).
There are two ways used for the purpose of calculating dividend tax, and they are known as qualified dividends and non-qualified dividends. Qualified dividends are stocks held more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. These dividends are taxed at 5 percent if the investor is below the 25 percent personal income tax bracket and 15 percent for investors over it. Non-qualified dividends are dividends that do not meet the criteri...
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...sis. The Heritage Foundation, 7 Jan. 2003. Web. 04 Mar. 2010. .
NATP. Economic Growth and Tax Relief Reconciliation Act of 2001. Digital image. NATPtax.com. NATP, 11 July 2001. Web. 16 Feb. 2010. .
NATP. Jobs and Growth Tax Relief Reconciliation Act of 2003. Digital image. NATPtax.com. NATP. Web. 16 Feb. 2010. .
NATP. Tax Increase Prevention and Reconciliation Act of 2005. Digital image. NATPtax.com. NATP. Web. 16 Feb. 2010. .
Wharton. "A Simple Solution to Stock Market Woes: Kill the Corporate Dividend Tax." A Simple Solution to Stock Market Woes: Kill the Corporate Dividend Tax. Knowledge@Wharton, 14 Aug. 2002. Web. 15 Feb. 2010. .
Investors are supposed to discount the stream of all future income from the share (using one of a myriad of possible rates - all hotly disputed). Only dividends constitute meaningful income and since few companies engage in the distribution of dividends, theoreticians were forced to deal with "expected" dividends rather than "paid out" ones. The best gauge of expected dividends is earnings. The higher the earnings - the more likely and the higher the dividends. Even retained earnings can be regarded as deferred dividends. Retained earnings are re-invested, the investments generate earnings and, again, the likelihood and expected size of the dividends increase. Thus, earnings - though not yet distributed - were misleadingly translated to a rate of return, a yield - using the earnings yield and other measures. It is as though these earnings WERE distributed and created a RETURN - in other words, an income - to the investor.
The FairTax Act will replace these costly, oppressively complex and economically inefficient taxes with a progressive national retail sales tax, which would be levied on the final sale ...
Condominium associations are unique in that the Internal Revenue Service (IRS) allows them to elect annually to be taxed as a regular corporation or receive special treatment and be taxed as a homeowners’ association. If electing to be taxed as a regular corporation IRC § 277 applies and Form
Lee, Y., & Gordon, R. H. (2005). Tax structure and economic growth. Journal of Public Economics, 89(5-6), 1027-1043. http://dx.doi.org/10.1016/j.jpubeco.2004.07.002
Dividend policy is distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.
The main goal of the dividend discount model is to calculate if the present value of the stock company is overpriced or underpriced, hence, the present value of the future dividend is a good calculus. Johnson and Johnson present value of the future dividends is 100.68. On the other hand, the current value of the JNJ stock is 125.23, indicating that the current stock price is overvalued. In addition, the price per share future using the Gordon model is 64.07 indicating once again the current price of the Johnson and Johnson stock is overvalued.
Government Track (2008). Economic Stimulus Act of 2008. Budget Report. Retrieved June30, 2010, from http://www.govtrack.us/congress/billreport.xpd?bill=h110-5140&type=cbo
Disappearing dividends: Changing Firm Characteristics or Lower Propensity to Pay? by Eugene F. Fama started the arguments by revealing the history statistics that the number of firms has been increased in general ever since 1973, while during the period of time between 1973 and 1978, there is relatively more dividend payers, however, the number has been relentlessly decreasing from then, to 20.8% in 1999. Contrarily, the number of non-dividend payers has been growing ever since. Such a great falling percentage raised a crucial question that whether the decrease of paying dividends to shareholders is due to the changing firm characteristics or simply there is less trend to make payments. The paper examined three significant characteristics that are most likely to affect the
Kinsley, Michael. “Tax Reform in Plain English. Honest!” Time 9 Dec. 2002: 58. Academic OneFile. Web. 31 Mar. 2011.
... the study is limited to these 5 companies. No concrete judgment can be reached describing the exact relationship between the ownership pattern and the dividend payout , as many factors come into play while deciding on the dividend decisions. Such qualitative reasoning are hard to judge and include in determining the relationship. We have identified major trends and based our observations on the same.
Robert D. Arnott and Clifford S. Asness, 2003. "Surprise! Higher Dividends equal Higher Earnings Growth". Financial Analysts Journal. Retrieved 2011-01-04
Deferred tax is an accounting measure, use to match the tax effects of transactions with their accounting impact. The differences of treatments for several items in accounting profit and loss and taxation have created temporary differences. These temporary differences are differences between carrying amounts of an assets or liabilities in the financial statement of financial position and its tax base (Choo & Lazar, 2014). There are two types of temporary differences which are taxable temporary differences and deductible temporary differences. A taxable temporary difference indicates that a taxation liability has been deferred in the past or current period and company will pay more in the future whereas deductible temporary differences indicate that a taxation liability has been accelerated in the past or current period and company will pay less tax in the future.
Price, Lee. "The Boom That Wasn’t: The Economy Has Little to Show for $860 Billion in Tax Cuts." Economic Policy Institute. N.p., 25 Oct. 2005. Web. 12 May 2014
Ross, S.A., Westerfield, R.W., Jaffe, J. and Jordan, B.D., 2008. Modern Financial Management: International Student Edition. 8th Edition. New York: McGraw-Hill Companies.
During the time of recession when business concern experiencing lower level of profit and interest rate is also low in the market, preference shareholder get dividend at fixed rate.