> Qualified dividends are taxed at the long term capital gain rate. One time, special dividends aren't, but that's just a reason to use a regular dividend instead.
That's not what I mean by preferred tax treatment.
If you get $120 as a dividend then you have $120 worth of taxable income. If you sell $120 worth of shares which you bought at $100 then you have $20 worth of taxable income. Even if the rate is the same, you're still paying significantly less in taxes because less of it is considered income.
> Investors could just sell shares if they wanted to raise money, but then they lose out on future growth in the company's value. Sending out profits to shareholders in the form of a regular dividend allows owners to have a concentrated investment in the business the company is in rather than it being diluted with some low risk / low return pile of investments.
Yes, that is the problem we would like to prevent.
But investors prefer that bad thing to happen over paying more taxes, so it does.
> The 2004 holiday saw about $312B repatriated. That may not be a huge number compared to the $1.9T discussed in the article but it hardly supports the claim that "nobody even really takes advantage".
I obviously didn't mean that literally zero people take advantage of it. That is not a large percentage of the total. And how much of that "repatriated" money is actually still in the country and not just an instance of people taking advantage of the tax holiday by moving money into the country during the holiday to reset their tax basis in it and then moving it back out to a tax haven again?
That's not what I mean by preferred tax treatment.
If you get $120 as a dividend then you have $120 worth of taxable income. If you sell $120 worth of shares which you bought at $100 then you have $20 worth of taxable income. Even if the rate is the same, you're still paying significantly less in taxes because less of it is considered income.
> Investors could just sell shares if they wanted to raise money, but then they lose out on future growth in the company's value. Sending out profits to shareholders in the form of a regular dividend allows owners to have a concentrated investment in the business the company is in rather than it being diluted with some low risk / low return pile of investments.
Yes, that is the problem we would like to prevent.
But investors prefer that bad thing to happen over paying more taxes, so it does.
> The 2004 holiday saw about $312B repatriated. That may not be a huge number compared to the $1.9T discussed in the article but it hardly supports the claim that "nobody even really takes advantage".
I obviously didn't mean that literally zero people take advantage of it. That is not a large percentage of the total. And how much of that "repatriated" money is actually still in the country and not just an instance of people taking advantage of the tax holiday by moving money into the country during the holiday to reset their tax basis in it and then moving it back out to a tax haven again?