Senate Finance Committee Mulls Dividend Paid Deduction

[Winchester]

The Senate Finance Committee held a hearing Tuesday on integrating the corporate and individual tax codes, specifically in terms of allowing corporations to deduct the dividends they pay shareholders from their taxes.

Senate Mulls Allowing Corporations to Deduct Dividends | Accounting Today News

Don't know if this will go anywhere, but it would be a step in the right direction. Letting corps deduct the dividends they pay to their shareholders would give them significant control over managing the income tax they pay and would give them incentive to pay out the excesses cash they do not need for expansion or operations. It might even ease the push for tax inversions. Probably needs to be combined with getting ride of the special dividend capital gains rates on the individual level to make up the revenue loss, but all in all I think this is good.

 

[Chomsky]

Senate Mulls Allowing Corporations to Deduct Dividends | Accounting Today News

Don't know if this will go anywhere, but it would be a step in the right direction. Letting corps deduct the dividends they pay to their shareholders would give them significant control over managing the income tax they pay and would give them incentive to pay out the excesses cash they do not need for expansion or operations. It might even ease the push for tax inversions. Probably needs to be combined with getting ride of the special dividend capital gains rates on the individual level to make up the revenue loss, but all in all I think this is good.

I'm running out the door, so will have to revisit this thread later today, but my first question is: "Who is going to pay for this"?

Someone is going to have to pick-up the tab, here.

But it seems like it might be a good idea if part of a two-pronged solution:

1] Tax deductions for paying interest.

2] A small tax on moneys not repatriated into the states.

That way the incentive is two-fold, and the actions can be tweaked to be revenue neutral or revenue positive.