Eliminating the double taxation of dividends will have an immediate and dramatic effect on the stock market because the value of any stock is the discounted present value of the after-tax earnings of the company. The reduction in the dividend tax increases after-tax earnings and therefore raises the value of shares of stock. Hence, the positive boost to the stock market from the dividend cut should be immediate and substantial — perhaps a $1 trillion increase in valuation according to some studies.
It’s hard to imagine any other tax cut that would produce that kind of bang for the buck.
The marginal income-tax rate cut from 39% to 35% is the other powerful pro-growth element of the president’s plan. Most remember the economic engine that was powered by Reagan's marginal-income-tax rate cuts of the '80s. Interest rates, inflation, and unemployment fell dramatically. Fifteen million new jobs were created. And the economy grew at a healthy 3.5%.
The level of freedom of any country can be measured by their tax rates. Economic freedom gives people the ability to enjoy a life of choices instead of a life of more work. What are taxes, but work you did for someone else without choice. By allowing people to work for them selves we allow them to own their time, thus own their own lives. Since we’re liberating the people of Iraq, why not liberate the people here with tax rates that give people their time back.
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