Replies to post #108290 on Intel Corp (INTC)

[willco]

By corporate law, dividends can only be paid from net profits. If there were no corporate income tax net profits would be larger and dividends could be larger. So shareholders who receive dividends are burdened by the corporate income tax. Further, even if the corporation pays no dividends ever, the value of the shareholding is affected adversely by any income tax paid by the corporation. This is very simple economics that should be taught in public school but then that would make the politician's lives and pocketbooks poorer.

[fastpathguru]

You're nit-picking. His issue isn't 42%, it's that he's paying any taxes at all on money that has already been taxed.

Partially. He can't JUST argue that "double taxation" is inherently unfair, because the two (arbitrary) rates can in aggregate be lower than a "single taxation" rate.

He needs to cling to that 42% number because it looks worse than simpler taxation vehicles, i.e. the 35% individual income tax bracket.

He believes that as a shareholder of the company, he owns his share of all the income already - and so he defines the dividend is a cash payment from the pool of money that he already owns. Therefore, he's arguing that it's double-taxation, and his basis is arguably without flaw.

If you're arguing against the double-taxation argument, then whether the real tax is 42.2%, or 15% with some amount of lost potential, or 27.2% with some portion of dollars taxed again at a lower 15% rate - all of these are versions of the same argument, and just nit-picking over the math.

Either conciously or not, Elmer only acknowleges "his share" of Intel earnings that wind up being taxed at 42% because they're distributed as dividends, while failing to acknowlege his equally "valid" ownership of "his share" of Intel earnings that are not distributed as dividends and are only taxed at 27.2%.

Because of course, 42.2% sounds scarier than 15%, 27.2%, 32%, and 35%.

fpg