Investors and Experts Propose Extending The Tax Cut on Dividends
Below is a MRR and PLR article in category Finance -> subcategory Investing.
Extending the Tax Cut on Dividends: A Proposal by Investors and Experts
Overview
A movement is gaining momentum to make the current tax cut on dividends permanent. This proposal has garnered substantial support from investors who highly value dividends.
Survey Insights
A recent survey by Eaton Vance Corporation in March revealed that 70% of Americans believe the tax cut from the 2003 Tax Act should remain in place. This sentiment is echoed by individual investors in Eaton Vance's annual study.
Expert Opinions
At a recent luncheon organized by Eaton Vance, experts in corporate finance, economics, tax, and capital markets gathered to discuss dividend trends and their implications for the stock market and U.S. economy.
Alice Rivlin, former vice chair of the Federal Reserve, was unsurprised by the strong support among investors for maintaining the lower dividend tax rate. She emphasized the need to widen the tax base, lower rates overall, and tax capital return just once to encourage investment.
Tom Roseen, a senior research analyst at Lipper, Inc., highlighted how the tax cut has benefited mutual fund investors. In 2004, funds in Lipper's U.S. Diversified Equity category distributed significantly more in dividends without increasing tax burdens compared to 2002.
Howard Silverblatt, senior index strategist at Standard & Poor's, noted that dividends provide essential income and facilitate dollar-cost averaging through reinvestment programs.
Future Projections
While Congress has yet to make a decision on extending the tax cut, experts shared their forecasts. Mark Weinberger, former U.S. Assistant Secretary of Treasury for Tax Policy and current vice chair of Ernst & Young, predicted a potential one-year extension through 2009 as a likely outcome of political negotiations.
Duncan Richardson, executive vice president and chief equity investment officer for Eaton Vance, concluded that returning more cash to shareholders through dividends is often the "right thing." He anticipates increasing payout ratios over the next decade, signaling a promising period for equity income investing.
About Eaton Vance
Eaton Vance Corp., a Boston-based investment management firm, trades on the New York Stock Exchange under the symbol EV.
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