3 ms·
But they aren't deductible for most companies, which disincentives them from paying them (they'd rather give that money to the C-suite as bonuses, and this is t
by carsongross 10y ago
But they aren't deductible for most companies, which disincentives them from paying them (they'd rather give that money to the C-suite as bonuses, and this is their excuse: tax efficiency.)
Dividends should be deductible against corporate income, which would eliminate this issue.
- sokoloff 10y ago"should be" - why? They're not an expense relating to producing income. COGS, cost of sales, overhead, etc are all related to producing income and so are deductible. Dividends to me are an outcome of already earned income.
- carsongross 10y agoYeah, I can see how would think about it that way if you get hung up on the idea of deductions as expenses. What I would prefer is if companies acted more like LLCs/flow-through entities, where all profits or losses flowed through to the owners, in proportion to their ownership stake. Making distributions (dividends) deductible against the corporate tax burden allows companies to closely approximate this. It would encourage them to return cashflow to investors, which is the point: Investors (in theory, owners) should participate in the cash flow of the companies they own, rather than bank on the capital gains/share prices leverage casino.