Dividend payouts expected to hit record $186 billion this year
The attached article serves as a reminder of the work being done by the Bush Administration to stimulate the economy through tax cuts. Mark Battersby writing in Investment News reports that companies in the Standard & Poor's 500 stock index are expected to pay out a record $186 billion in dividends to shareholders in 2004. The record dividend payments result from the lowering of the minimum tax on qualified dividends to 15% last year combined with healthier profit margins for the companies in question and an improving economic climate.
In the past, dividend income was treated as just another type of ordinary income, taxed at the individual taxpayer's normal tax rate, whichßcould be as much as 35% for federal income tax alone. Beginning in 2003, the maximum federal tax rate on qualifying dividends dropped to a maximum of 15% and a minimum of only 5%.ß In order to qualify for the new lower taxes on dividends, the stockholder must hold the stock on which the dividends are paid for more than 60 days during the 120-day period that begins 60 days before the last date on which a shareholder of record is entitled to receive the upcoming dividend.ß The bottom line is that all investorsßnow pay lower tax rates on dividendsßreceived from domestic corporations and qualified foreign corporations under the provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003.ß
Battersby adds that the U.S. Treasury Department believes that federal tax cuts including this one have helped small businesses create jobs, and are driving U.S. economic growth. Battersby quotes Secretary of the Treasury John W. Snow as saying: "Since the signing of the Jobs and Growth Tax Relief Reconciliation Act of 2003 a little over a year ago, the economy has experienced a full turnaround and is firing on all cylinders. Economic indicators across the board are very strong, including three...