Buffet Speaks on Dividends

Buffet has written an article for the Washington Post talking about Dividend Voodoo. The idea of the US Senate is to make Dividends Tax free for a few years and then tax them again… in a sense, companies would almost have to pay dividends in that time and hold them the next year(s). He even argues that his company, Berkshire Hathaway could pay out $1.000.000.000 in dividends and then he would get $310.000.000. Tax free! No questions asked! By his calculation, this would move is tax rate from 30% to 3%. Fun ey? :) And on top of that Berkshire Hathaway would invest that money otherwise, and it’s not like he would invest all of it or something while Berkshire wouldn’t. Hence, it’s not really stimulating the economy much does it? And _Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets._

The following also applies very well to Germany though: “ _When you listen to tax-cut rhetoric, remember that giving one class of taxpayer a “break” requires — now or down the line — that an equivalent burden be imposed on other parties. In other words, if I get a break, someone else pays. Government can’t deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party.”_

I can’t fully agree, as you can for example lower taxes and put more burden on individuals for some things, something that would be a good thing in Germany, but all in all, it’s very much worth remembering.