Zeev, Maybe I'm missing something but even if half of dividends are in non taxable accounts the other half bite J6P mutual fund owners at tax time. People do sell holdings to pay off dividend related taxes. That money, if not taxed, ends up staying in the market. Also, as you point out their will be considerable asset reallocation from munis to stocks. That has got to be a huge stimulus to the markets especially when it is timed at the bottom of a cyclical bear. Agree with you that it may not be a great stimulus to the economy.
Longer term to whatever extend stock prices are a function of earnings and dividend flow, lowering dividend taxes could buffer the bottom of the secular bear market. It seems reasonable to expect that at some point years from now if stocks resume declining they will hit a point where dividends get so high it stops the decline. We'll hit that point earlier with lower dividend taxes.
You're right about #6 covering the election cycle. Thanks for answering my post and teaching so many here including myself (mainly a lurker) to be better traders. Congrats on upcoming simchas.
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