 |
||||||||
 |
||||||||
|
||||||||
|
Dividend tax cut plan double-edged
By HELEN HUNTLEY and ALICIA CALDWELL
© St. Petersburg Times President Bush's proposal to dump the tax on dividends drew a mixed reaction from Tampa Bay area investors Monday, perhaps a sign of controversy to come as the plan heads to Congress. "I'm strongly opposed to being taxed on dividends to begin with," said Bill Athanasulis, 36, who hailed reports about the presidential plan, scheduled for formal unveiling today. Athanasulis owns a small company that builds swimming pools and said most of his investment portfolio is in dividend-paying stocks. "I think when people are trying to save money for retirement or whatever, it's a shame to have to pay taxes on it," he said. The plan also got an enthusiastic reaction on Wall Street Monday, with key market indexes gaining 2 percent. The Dow Jones Industrial Average closed at 8,773.57, up 171.88 points. Elimination of the tax on dividends is part of a $600-billion proposal to rev up the lackluster economy before next year's presidential election campaign gets under way. Other aspects include speeding up planned reductions in income tax rates and offering additional tax incentives for capital investment. But in an informal survey of members of the Times Money Panel, some investors said it's unfair that cutting or eliminating the tax on dividends would disproportionately help the people who need it least -- the wealthy. "I'd rather see some of the tax breaks go to the middle class rather than the rich," said Richard Ashton, 70, of St. Petersburg, a retired municipal finance director. He calculates the tax break would save him very little, perhaps $10 a year. Amy Darnall, 33, of Lutz, a stay-at-home mother, said the changes wouldn't affect her family much. She said she would like to see tax cuts that would help the middle class, not the upper-income brackets, as she suspects this proposal would. "We're getting to the point where there is no middle class," she said. "You're either wealthy or you're poor." Investors who support the proposal say they don't think it is fair that dividends are taxed twice. Dividends are paid from companies' after-tax profits, then taxed again as investors receive them. "That's an egregious wrong that's been with us for a long time," said Frank Yanacek, 71, a retired manager who lives in Sun City Center. Other investors doubt that the plan will have a big impact on the economy. "I don't see how it will affect the economy, but I do hope it makes the stock market go up," said Spring Hill investor Sheila Wherenberg, 61, a retired purchasing manager. "How much money are you going to save just by not paying tax on your dividends? Not a lot unless you're way up there. Those people would just reinvest their money in the stock market. They're not going to go out and spend their money." Wherenberg said elimination of the tax might make her more inclined to purchase stocks that pay a dividend. Yanacek in Sun City Center said he probably would not boost his spending if his tax bill went down. But he said he probably would give more money to his children, who would be inclined to spend it. Retired nurse Joanna Bergamo, 76, of Largo, said she would favor anything that reduces her taxes. "I'm of the generation, find a penny, save a penny," she said. "It is a savings and that's important to me."
 © 2006 • All Rights Reserved • St. Petersburg Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111 
|
From the Times Business report
From the AP
|
