Snow Believes Dividend Tax Cut Will Improve Corporate Behaviour

by Mike Godfrey, Tax-News.com, Washington

26 March 2003

US Treasury Secretary John Snow has said the axing of the double dividend tax, the central lynchpin of the Bush economic stimulus programme, will improve corporate behaviour and decrease the rate of unnecessary take-overs.

Speaking to the Tax Executives Institute, Snow qualified his argument by explaining that the tax cut would end the heavy reliance on borrowing and debt in the corporate sector, a by-product of which is a greater tendency towards take-overs and acquisitions. Snow announced that he hoped the outcome of the dividend tax cut would be to allow firms to use their own funds more effectively and "encourage greater use of equity capital."

Meanwhile, the $726 billion dollar stimulus plan which for so long looked doomed in the light of the war and burgeoning budget deficit, has survived an attempt by moderates to chop it in half. It now looks likely that the plan will pass more or less intact despite certain concessions that have been granted to its opponents. The two parties have apparently allowed each other 40 amendments before the draft is put to the vote on Wednesday. However, according to reports, confidential sources have revealed that these amendments will be minor and and will not dramatically alter the spirit of the plan.

Recommended