In the 1951 comedy hit, "Father's Little Dividend", Spencer Tracy (as Stanley Banks) learns that his daughter (Elizabeth Taylor) will become a mother...and he comes to grips with the prospect of becoming a grandfather.
In yesterday's New York Times, 4/5/06, they published a topographic map that depicted the average dividends received per taxpayer in each of America's 3,141 counties in the year, 2003. In 2003, more than $90 billion was distributed to shareholders around the country...yet only 21 counties had an average of more than $2400 in dividends per person.
On the dividend map, the highest 'peak' was Bristol, VA, a city that the I.R.S. treats as a county. Dividends there averaged a remarkable $33,392 in 2003, a tenfold increase from prior years. Most likely, this is a one-time payout of a locally-controlled business. The Prospecting Professor notes that Settlers Life, the mutual insurance company, is based in Bristol, Va...and surmises if the dividend payout is related to this company.
The other top dividend-recipient counties are Kewaunee County, Wis., east of Green Bay, at $14,117...and Teton County, Wyo., surrounding Jackson Hole, at $13,025. Both counties have small populations with a high proportion of wealthy citizens, e.g. Dick Cheney and Harrison Ford in Jackson Hole.
Syracuse University has also analyzed the I.R.S. data, and published a list of some of the other Top 50 U.S. Counties for Dividend Income on federal tax returns filed in 2003. Here's a partial list:
- Collier County, Florida
- Pitkin County, Colorado
- Indian River County, Florida
- Marin County, California
- Martin County, Florida
- San Juan County, Washington
- Talbot County, Maryland
- Lancaster County, Virginia
- Blaine County, Idaho
- Goochland County, Virginia
In a New York Times article linked to the one cited above, it was noted that Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003. The savings for these taxpayers averaged about $41,400 each.
Regardless of your political stripe, this should provide some grist for the mill.
I'm not sure that the dividend tax cut is such a big issue. If more people saved and invested their money rather then spending it hand over fist, then a more diverse group of people would collect dividends.
Also it's very important tease out the difference between capital gains taxes and dividend taxes. Many people who collect dividends are pensioners/retired folks who use the income to supplement their retirement. On the other hand the easiest way to have capital gains is from stock options or selling real estate.
Anyone with a checking account can open an account with an online broker and begin investing. Many banks are offering high yield savings accounts that pay up to 4.6% APR.
I think the dividend tax cut was good thing because it encourages people to save.
Market Participant
Posted by: Market Participant | April 06, 2006 at 07:51 PM