US Securities Firms Call For Permanent Dividend Tax Cut

by Mike Godfrey, Tax-News.com, Washington

06 August 2004

US trade body the Securities Industry Association has called for the cut in dividend tax to 15% passed in last year’s tax cut package to become a permanent feature of American tax law.

“While we have yet to see the full impact of the dividend cut, the growth in dividend payouts has benefited both investors and issuers,” SIA Chief Economist Frank Fernandez observed.

Citing Microsoft’s announcement to pay out a record $32 billion special dividend as a visible example, the SIA noted an increasing number of companies are either initiating dividends or increasing their payouts.

According to the latest issue of SIA’s Research Reports, personal dividend income for 2004 is expected to grow more than 10% from last year’s numbers.

“It would be counterproductive not to extend the dividend tax cuts,” argued Mr Fernandez.

“Better still would be to remove the remaining biases and distortions by completely eliminating the double taxation of dividends,” he concluded.

The SIA represents the shared interests of nearly 600 securities firms including investment banks, broker-dealers, and mutual fund companies.

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