Sununu Opposes Double Taxation
By Daniel Remin
WASHINGTON — Sen. John E. Sununu, R-N.H., at a press conference yesterday, called for an end to the double taxation of dividends, saying such a tax is unfair and “wrong.”
“This isn’t about rich and poor, it’s not about old and young, it is about fairness and the simple question, whether or not it is ever right for the government to tax someone’s income twice,” Sununu said at the press conference.
Double taxation refers to the fact that corporate income is taxed and then the dividends the companies pay to their shareholders also are taxed.
The Granite State’s junior senator joined members of the Seniors Coalition, a conservative senior advocacy group, and congressional leaders who support President Bush’s proposal to end the dividend tax.
Senior citizens are most affected by the dividend tax, advocates of its repeal say, because seniors receive half of all dividend payments and rely to a greater degree than younger people on income from their investments.
“It’s time to ax the double tax on dividends,” Flora “Grandma” Green, the Seniors Coalition’s lead spokeswoman and grandmother of 24, said in her speech. “As you grow older, you move from higher returns to safe, conservative investments like dividend-paying stocks. But seniors are not able to enjoy the fruits of their careful planning because the stock earnings that have already been taxed once are taxed again.”
Under Bush’s plan, ending the dividend tax should allow Americans to keep more of their income and lead to more jobs and a stronger economy. According to Sununu, America has one of the highest dividend taxes in the world.
“Every country in Europe has lower taxes on dividends,” he said. “Those countries recognize that by reducing the rate of taxes on dividends you’re going to encourage savings, encourage better corporate behavior and you’re going to treat the citizens of your country more fairly. It’s the right thing to do for our retirees.”
Opponents of the plan, however, contend that such a tax cut would benefit the wealthy primarily because they are the ones who have the most dividend income.
“Although low and middle-income owners might get modest tax cuts from the dividend cut, higher-income people would get huge cuts from the dividend tax cut since they have much higher amounts of dividends,” Andrew Lee, a research assistant with the Center on Budget and Policy Priorities, said.
Lee also said that the same applies to seniors. “It disproportionately benefits high-income elderly rather than low- or middle-income elderly.”
Green, on the other hand, said all seniors would be affected by the tax cut. “”Seniors receive half of all dividend payments, and they are not rich,” she said. “We’ve got to seize this opportunity. Now is the time for lawmakers to make a commitment to seniors to ax the double tax.”
According to Green, seniors’ median dividend income is $2,400 with an after-tax income of $35,000.
“”This isn’t about faceless wealthy American(s),” Sununu said. “It is about those that have saved, those that have put away money for their retirement and whether or not we’re going to tax it twice. It’s simply wrong.
“This is a proposal about encouraging economic growth,” Sununu said in an interview after his remarks. “Only a liberal Democrat would really believe that spending more money is a key determinant of economic growth. You encourage economic growth by giving people incentives to save and invest, and that’s what this proposal is all about.”
But Lee said he does not think such a tax cut will help the economy because the money takes away from other services.
“One fear is that these type of tax cuts can drain resources that could help low-income or middle-income elderly people more,” he said. “”For example, these health care issues or Social Security issues. To the extent that these tax cuts reduce resources for those programs, [it] could actually hurt middle-income or low-income elderly people more than it would help them.”
Last week, the Jobs and Growth Tax Act, which calls for elimination of double taxation of dividends, was introduced. It has been referred to the Senate Finance Committee.
(Daniel Remin is an intern with the Boston University Washington News Service.)
Published in The Manchester Union Leader, in New Hampshire.
