News Release

Bush’s Plan: Paying Dividends to Whom?

In connection with the “growth and jobs” plan put forward by President Bush today, the following analysts are available for interviews:

RANDY ALBELDA
Albelda is a professor of economics and chair of the Public Policy Ph.D. program at the University of Massachusetts at Boston. She said today: “With unemployment rates climbing, the income and wealth gaps between the rich and poor reaching 1920s levels, and states facing $80 billion worth of budget deficits, we desperately need a stimulus package that puts people to work, helps close the income gap and substantially prevents states from laying off workers and cutting valuable public services…. Cutting dividend taxes and accelerating income tax cuts amount to a $600 billion reduction in federal coffers over the next 10 years. Almost half of that will go to the richest 1 percent of the American people, a group that saw their fortunes soar in the 1990s.”

JOHN MILLER
Professor of economics at Wheaton College in Massachusetts, Miller is a contributing editor of Dollars & Sense magazine. He said today: “Eliminating taxes on dividends will do little to stimulate business investment…. With so much of the benefits going to the best off in our society, who spend a smaller portion of their income than the rest of us, repealing dividends taxation is an ineffective way to increase consumer spending…. The administration claims its proposal is nonetheless fair because it ends the double taxation of dividends. But this is so much doublespeak; double taxation is a fact of life for every taxpayer, not just dividends collectors. Most workers, for instance, pay Social Security payroll taxes and income taxes on their wages, and then sales taxes when they spend what remains of their paycheck.”
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DIANA ZUCKERMAN
President of the National Center for Policy Research for Women & Families, Zuckerman said today: “The Bush administration has suggested tax cuts on dividends, which would provide small benefits to most Americans and impressive benefits to our wealthiest families. House Democrats have suggested tax breaks for small businesses, which are unlikely to provide much bang for the buck in terms of helping either the economy or most workers. Why not stimulate the economy by creating more jobs and larger paychecks in ways that will help many families…”
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DEAN BAKER
Co-director of the Center for Economic and Policy Research, Baker said today: “The vast majority of stockholders hold most of their stock in retirement accounts, such as 401(k)s or IRAs. Under the president’s proposal, these people will continue to pay taxes on their stock dividends. The tax break will only apply to stock held outside of retirement accounts, the vast majority of which is held by the rich. The president apparently views weak economic growth and rising unemployment as yet another opportunity to give more money to rich people.”
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For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167