Reply #8: dividends and investment

[mulethree]

These are both 'profits', dividends being profits returned to the shareholders and investment being profits invested by the corporation.

Tax them differently? If the shareholder wants to invest the dividends it has to go through a tax first, so you get no dividends, they're inefficient. All profits get retained and invested by companies.

Then the corporations that were founded as "just a group of people trying to get something done" end up being entities devoted to investing to avoid tax on dividends, and the original "something done" gets lost. This is also promoted by corporate tax breaks and other ways that money can be grown in a corporation with less tax paid than would be paid if the same purpose were fulfilled as a partnership rather than a corporation.

I think they should be restricted to a particular purpose, and when they exceed that, they pay out their excess as dividends rather than diversifying, merging and otherwise investing and expanding.

Then the shareholders pick how to invest their dividends and no mega-corps develop.

The tax law should treat the two uses of profits neutrally or perhaps encourage 'the people' - or dividend over the growth of corporations.