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0 pointsmarcusverus5y ago0 comments

> Instead of taxing the profit of a corporation, just tax the payment of dividends from that profit.

This would be regressive, though. Why not tax the individual via a progressive cap gains tax?

> It also removes the incentive to mess around with stock buybacks, which is good because the extra liquidity can be put to better use within the company.

If a company can't think of a good use for their profits, do we really want to force them to keep the money within the organization? This seems like a recipe for bloated budgets and bigger Christmas parties, but I'm not sure that we could expect much benefit otherwise.

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cuspycode5y ago

> This would be regressive, though. Why not tax the individual via a progressive cap gains tax?

How would it be regressive? According to Wikipedia[0], most corporate tax rates are proportional (i.e. "flat"). Just replace that with an equivalent rate on payout of dividends. Capital gains tax for the recipient is an entirely separate question.

> If a company can't think of a good use for their profits, do we really want to force them to keep the money within the organization?

In such situations they can pay dividends of course, which are taxed in my proposal. The point is that there is no point in buying back stocks instead of paying dividends.

[0] https://en.wikipedia.org/wiki/Corporate_tax#International_co...

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