Divend Tax rate cuts encourage companies to pay dividends where traditional tax law has encouraged capital appreciation (and discouraged the payments of dividends).

Ironically, when dividend rates are cut, those companies that pay large dividends reap stock price appreciation...

the dividdend paayments themselves encourage the efficent re-allocation of capital: The reciever of the dividends is free to invest the money in some other investment, or he could spend the money on something else...Both would have stimulative effects...

You are right that it might not happen overnight: Dividends are paid out quarterrly in most cases. And an change in tax collections would also probably therefore take a quarter or so to hit as would any direct economic impact. But that is probably a good thing anyway. In fact, you probably wouldn't want it to happen overnight: You want the economy to expand slowly but surely...The investment of capital in income producing activities is a good thing economically speaking...And cutting the divident tax rate to encourage that type of investment is a good thing.

In closing, you will note that less than a month ago the Democrats were claiming that Bush's tax cuts were strangling the economy...Clearly they were either lying or they are in left field when it comes to economics. Take your pick. If the pick-up in economic activity results in increased tax revenue (and a return to a tax collections surplus) then it will be undeniable that Bush's supply-side/tax-cuts worked magic.

Time will tell. (As someone here likes to point out: Models don't always predict the real world). But I must admit. Its nice to see Washington try something outside the box once in a while.

Maybe if this works we can try medical savings accounts as a means to insure all Americans.

Scott Evil