Yes, for those who live on unearned income, these are flush times. Thank you, George Bush and the Republican Party.
Cash Flow in '04 Found Its Way Into Dividends
By FLOYD NORRISPublished: January 4, 2005
American companies stepped up their dividend increases in 2004, buoyed by strong cash flows and by a changed tax law that made dividends more attractive to shareholders.
But the really good news for shareholders on the dividend front was that the number of negative dividend actions hit a record low of just 64. Of those, 35 were announcements of dividend cuts and 29 were decisions to omit dividends entirely.
Oh, you work for a living?
Never mind.
Article comments
— go to most recent comments1 - Temple Stark
That' s pretty simplistic. Plenty of working people own stocks.
2 - Eric Olsen
exactly, and plenty more do indirectly through pension funds, etc. I would also call into question the characterization of "unearned" income: who says? I entirely agree with the basic concept that the system is set up to help the well-off get more so, but it seems to me the point is to find a way to grab on to the train, not to derail it in the name of class warfare
3 - Aaman
So you were not a fan of the market increases in the 1990s, I take it?
One effective way of investing, and perhaps suitable for a full length post, if appropriate for bc (eric?) is investing in ETFs or Exchange Traded Funds - one of my favorites is DVY, that focuses on high dividend yield stocks. Makes more sense than stock picking for the amateur
4 - P6
Temple Stark:
You want deep analysis in three sentances? Sheesh. Tough audience...
The Federal Government.
Check the definition of the unearned income tax code.
Aaman:
Don't be ridiculous. I'm not a fan of untaxed dividends.
Know why?
5 - Aaman
Excellent citation - care to explain how pyramidal, interlocking corporations formed since the 1930s despite laws such as the above? Case in point - Enron. There are many more.
6 - P6
I think it sufficient to point out continued creative manipulations of the eonomy. Speaks volumes about intent.
7 - Temple Stark
>>You want deep analysis in three sentances?
No, clearly I want more sentences because from your previous posts I know you're smarter than those three sentences and I was looking froward to reading your pov.
Speaking as a reader.
8 - P6
Well, I guess that calls for an explanation of tactics.
As Eric says, we need no class wars, but we have one...and it's being waged in way gross and subtle. The subtle stuff depends a LOT on people assuming they will actually receiving the benefits of all these wealth transfers.
Now, reporting that folks on one side of the economic gap are getting all the goods is straightforward. PROOVING it is straightforward, but will make most folks eyes glaze over.
So you bring the initial concept as simply as possible: "Here's the good news. Now did you benefit?" And explore from there.
9 - Eric Olsen
okay, you are correct about the technical meaning of "unearned income" - I interpreted it as a value judgment
10 - P6
I will confess to taking advantage of the reflexive reaction most Americans have to the term "unearned."
But I will also point out that one benefits from Republican fiscal decisions in direct proportion to the percentage one's income is unearned.
In the technical sense.
11 - P6
Total aside, but that even technical terms like "unearned income" immediately are vested with ethical/moral implications should be noted. It explains why folks who complain about "political correctness" are usually assumed to have ethical problems by folks on the receiving end of the slurs that are being defended.
12 - Harry Forbes
The government's title is pejorative, and designed to be so. It is less judgemental to say "dividend income" or "income besides wages salaries, and tips".
Does P6 believe that people at Fidelity Investments "work for a living"?
What about people with a 401K managed by an intermediary like Fidelity? All such people likely receive some amount of dividend income, whether taxed or sheltered from tax in 401Ks.
For the vast majority of individuals, these investments represent a nest egg in development, rather than assets of sufficient size to generate all the income that one requires. Most folks probably receive BOTH dividend and wage/salary income, but P6 paints this situation as a dichotomy. It isn't.
13 - P6
What bearing does that have on the discussion?
P6 does NOT paint this as a dichotomy.
P6 says, a mere two comments above the one in which Harry Forbes incorrectly says P6 paints this as a dichotomy:
i.e.; a continuum.
P6 does, however, suggest on's treatment depends on one's position on that continuum.
14 - Al Barger
The label "unearned income" is real convenient for socialists. The implicit argument is that people don't deserve that income, so "society" ie the socialists should be able to take that money and spend it as they wish.
Besides the fact that an increasingly large share of stocks are owned by pension funds for middle and working class Americans, the individual traders and speculators are in fact contributing very significantly to the economy and the creation of wealth.
They are analyzing and directing money to where it will be best invested. This is an absolutely critical, basic function in the economy. They provide the money for new businesses. They direct it away from companies that are sucking. It was primarily the market, not government intervention, that put a stop to Tyco and Enron.
15 - Maurice
All of these comments are twiddling while Rome burns. We could also complain about the 'Earned Income Credit' which enables certain people who qualify to receive a greater refund than the amount they actually paid in. The real solution IMHO is to reduce the size of government and go to a VAT. Otherwise the quibbling over who is getting preferencial treatment will never end.
16 - P6
Unearned income isn't a label, it's a name, and it's been used since long before socialists had any impact on the political scene.
Socialists must scare the shit out of you. Bet there's some under your bed...
But I'm a reasonable man. If calling unearned income unearned income makes you uncomfortable, I can show some flexibility for the sake of discussion. Let's call it "privileged income." I think it fits: it's taxed at a lower rate than earned income already, and yet all anyone is concerned about is lowering the rates even further.
Now that the absurdity is out of the way…
I guess it's not.
PLEASE tell me what point you're trying to make.
17 - P6
Hey, Eric:
See how they're still flipping over the word "unearned," even when I openly said I was playing them thereby?
Meanwhile, had I called it "torklebury income" it would be the same damn thing.
18 - P6
And what are the assumptions about the nature of people, government and society that make this so clear to you and the very, very few non-economists that agree with you?
19 - Maurice
And what are the assumptions about the nature of people, government and society that make this so clear to you...
Huh? I thought I was clear. As long as there are tax breaks for rich and poor there will be no end to the whinning about certain segments of tax payers getting a raw deal from the feds. For example:
I lead a humble life so I can afford to only buy stocks that pay a dividend. I can't afford to send my daughter to college and get the college credit to take off my taxes. Thats not fair!
Here is another example:
My sister makes just enough to qualify for the Earned Income Credit allowing her to get a larger refund that what she paid in. That's not fair!
If you are taking exception to the idea of a VAT...ok I'm kind of there with you but I would say that a VAT would not be allowed unless you abolish the IRS.
20 - Aaman
People will always whine about taxes - it's the nature of things - ref GBShaw. All over the world, taxes are a pain, and tax avoidance (not evasion) a much sought after art, VAT or not
21 - Al Barger
Objecting to government robbing you is "whining." Complaining about the government not taking enough of other people's money at gunpoint, however, is just trying to show civic concern.
22 - P6
BWAAAAHAHAHAHAAhahahahaahha!
*sniff*
Go on. Please.
23 - P6
Hoping to avoid more bumper stikers posing as arguments, let me make a serious suggestion.
What I'm saying here, so it's not obscured by reflexive resistance to a know progressive, is there's a kind of income that is privileged over earned income. Call it what you will, it's taxed at a lower rate than earned income.
Now, there are a couple of ways to react to this. The way I would suggest is that rework upcoming tax reductions so that they all apply to earned income. Resolve that earn and unearned income will be taxed on the same progressive schedule.
Why should a business that earns a dollar get to keep more of it than a man supporting his family would?
24 - P6
Think about it, guys. Would you benefit more by a tax cut on your earned income or on your 401K...which is already untaxed?
25 - Dave Nalle
>>okay, you are correct about the technical meaning of "unearned income" - I interpreted it as a value judgment<<
Strangely, that's the way I read it too, despite my painful familiarity with the tax code.
Calling income earned from stocks 'unearned' is a great example of prejudicial terminology, where someone - in this case presumably in Congress - picked the term which would be applied to income earned from investments to make it sound more 'fair' to tax that income by making it sound like some sort of undeserved windfall.
I know that I worked hard to earn the money that bought the stocks that now make some additional profit for me, so long as I do additional work to pay attention to the market and put the money in good funds and individual equities and monitor my portfolio and move the occasional investment around to keep it 'tuned'. That takes time and thought and that makes it work, and as far as I'm concerned that means I earned the income.
Dave