Fallout From Dividend Tax Cut

Double taxation of dividends is actually a tax shelter, because it allows companies to resist the demands by shareholders to distribute retained earnings. In other words, it promotes growth. Having to go to capital markets for growth capital puts companies at the whims and fancies of wall street sharks and charlatans. The dividend tax cut by Prez Bush is yet another blow to the aspirations of the technology companies and yet another bone thrown in the direction of old-line mature companies, such as Texas oil companies. It shows the risk of a country-club republican (who hangs out with the lions of old line industries) getting the supply-side religion - they will cut taxes in all the wrong places.

Here is the news article that captures the problem: Shareholders sending message to Microsoft:

Give us growth or give us a dividend, Microsoft shareholders are saying to
company execs. They're reacting to Microsoft's $49 billion in cash, which
the company says it needs, and its stock price, which remains depressed.
The demands reflect a philosophical divide: ''Microsoft as the mature tech
giant facing slower growth and Microsoft the still-aspiring tech innovator
that keeps investing aggressively in the future.'' The company says it
wants the cash to cover antitrust liabilities, but analysts increasingly
aren't buying it.