Replies to post #108163 on Intel Corp (INTC)

[Elmer Phud]

What difference does it make if the corporation is paying the bill before the dividend is handed out, or you are paying the bill after the dividend is handed out - other than perception?

None as far as I'm concerned. I think the measure is the net tax paid on the earnings.

Not if by raising the tax to individuals, they credit the tax of corporations by the same amount. It would actually incentivize companies to invest cash in dividends, in order to get the tax credit.

That works for me.

Are we really disagreeing on anything here?

[salasidis]

What difference does it make if the corporation is paying the bill before the dividend is handed out, or you are paying the bill after the dividend is handed out - other than perception?

There is a difference, and that is tax deferral. The company can keep the earnings and invest them at a later date without losing a significant chuck to taxes up front. If they are to be distributed in the same year they are earned in totality , then there is no difference.

As an example, say a company earns some money on yr 1, but finds no significant opportunities for investment. It could keep all that money, and make a larger investment 2-3 yrs later, after a significant accumulation of wealth.

Government does lose out on the taxes up front, but will eventually make that up when the money is spent.

Just to mention passive gains within a company (ie interest on cash, capital gains on stock holdings etc) should be taxed up front, but thje money is later reimbursed when the cash is distributed to shareholders (then the shareholder pays the tax again at that point). This discourages creating compines simply to hold investment money with no actual business prospects.