So, President Bush is set to announce his new economic “stimulus” plan. The centerpiec e of it is eliminating the tax on dividends. I’ve read any number of articles in the past week that explain clearly why this won’t help. The bottom line is that it’s better for the economy if businesses reinvest their profits in their own businesses rather than paying them out to investors in the form of dividends. From an IT perspective, the number one problem right now is the lack of new projects that would staunch the flow of jobs out of the industry. You just don’t see job listings these days for people to work on new initiatives.
Take Microsoft for example. MS has tens of billions of dollars just languishing in the bank. How about some capital spending, guys? I just don’t see how more tax cuts, and especially a tax cut on dividends, are going to help.
The Economist commentary is worth reading.