From: Robert J. Bradbury (bradbury@aeiveos.com)
Date: Fri Jan 10 2003 - 12:04:01 MST
On Fri, 10 Jan 2003 Dehede011@aol.com wrote:
> Let me give you an example -- it is not unheard of for Congress to
> "close a loophole" and to have the tax professionals wring their hands. Then
> after several years of dealing with the application of the closed loophole
> for the professionals to suddenly realize that some congresscriter had stuck
> in yet another loop hole for the benefit of some unknown party.
I'm not sure that I would give the congresscriters that much credit.
It might be right in some of the cases but I'm reminded of an old story
of Sen. Bob Packwood's before he slipped on his self-created banana peel.
Apparently the Sen. agricultural committee had worked long and hard trying
to craft an agricultural bill that would cost the U.S. Gov. no more than
$10B in subsidies. No more than a few years after the bill was passed
the farmers had figured out how to fix their crop plantings such that
the bill was costing the gov. $40B/yr. Moral of the story: many motivated
minds trump fewer less motivated minds (who might think they are "smarter").
You may be right that there is some complex swap-in/swap-out of loop holes.
I'd be more inclined to write much of it off to a lack of foresight.
> But it does seem clear that it will help the 401K plans. It also
> appears he is trying to attract some of the manufacturing that has gone out
> of the country to come back. If so he has a long way to go.
Perhaps. The question of whether it will help/hurt 401K plans and/or
investment accounts seems complex.
See:
January 7, 2003
Financial Dominoes and Dividend Taxes
FLOYD NORRIS
http://www.nytimes.com/2003/01/07/business/07PLAC.html?pagewanted=print
January 10, 2003
Bush Offers a Break if Companies Pay Taxes
FLOYD NORRIS
http://www.nytimes.com/2003/01/10/business/10NORR.html?pagewanted=print
(the second of which I think I posted previously.)
[If you don't want to read these now, at least grab them and save them
because within a few weeks the NY Times will likely turn them into pay-per-view.]
My read of the whole affair is that it really changes the investment
playing field. CEO's and boards are going to have to decide whether
they want to cultivate groups that don't benefit from dividend tax relief
(i.e. they remain in the old paradigm of tax reduction, going offshore, etc.)
or whether they want to shift into the paradigm of delivering a relatively
guaranteed tax free return to their investors on an annual basis.
It is *very* complex.
Robert
Robert
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