Bush proposed eliminating taxes on dividends. I don't think it will pass as requested but if it does it will mean that wealthy retirees living off dividends will pay no taxes. It is called double taxation because a companies income is taxed and dividends are then paid. Taxes are paid on the dividends by individuals. Individuals only pay once, but as stockholders they have essentially paid twice.

This sounds unfair but government income would be the same with a higher single pass tax on corporations. Would that make it fairer? By taxing it the second time the income is taxed according to the individuals tax bracket. If you agree the rich should pay more because they can afford more or because they benefit from the system more then the current system is fairer. If you think a flat tax is fairer then doing away with the dividend tax makes sense.

I used to disagree with the progressive tax approach feeling a flat tax was fairer, but as I've gotten older and seen how people with wealth often abuse the power money provides my opinion has changed. Wealth is often used to gain advantages the poor don't have such as access to better schools medical care and legal services. I've also seen how inherited wealth does not breed the competitiveness that is the strong point of capitalism. The power of position is often used to stifle the competitiveness of upstart competition. Concentration of wealth increase the potential for corrupting the way our system is supposed to work by making crony and fraudulent capitalism more prevalent than pure may the best team win capitalism. I think the recent tax cuts and increased corporate fraud are at least partly linked through the increasing income gap that has occured since then.

I feel strongly that innovation and risk taking should be rewarded. I applaud inventors and innovators that become billionaires. I don't think people should become rich by earning hundreds to thousands of times more than their workers by running already established companies and making simplistic decisions like ordering their subordinates to cut costs by 10% then pocketing a large share of the saving in stock options. The guys that figure out how to cut costs by 10% should be the ones rewarded, but they are making barely more than union guys who just go through the motions every day doing the minimum they can to collect a paycheck. Union pay scales that pay the same for hard workes as they do for minimum work guys are another thing that irritates me. Capitalism works best where workers are fairly compensated for the value of their work.

Regards,
Mark