[Congressional Record Volume 148, Number 124 (Thursday, September 26, 2002)]
[Extensions of Remarks]
[Page E1658]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           INTRODUCTION OF THE DIVIDED PAYMENT INCENTIVE ACT

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                          HON. THOMAS E. PETRI

                              of wisconsin

                    in the house of representatives

                     Wednesday, September 25, 2002

  Mr. PETRI. Mr. Speaker, today, I have introduced legislation to 
authorize a deduction from corporate income for dividends paid to 
stockholders. The stock market's continued sluggish performance makes 
this bill particularly timely. The Dividend Payment Incentive Act of 
2002 will help to boost overall stock market performance by providing a 
very real incentive for investors to put their hard earned money back 
into the stock market.
  Allowing corporations a deduction for dividends paid is important for 
many reasons, including:
  This legislation will end the double taxation of dividends. Today, 
there is a 35 percent tax on corporate income and then stockholders 
also pay regular income tax on dividends received. An investor in the 
27 percent tax bracket receives less than 48 cents for each dollar of 
earnings a corporation designates for dividend payments.
  Current tax policy provides a disincentive for corporations to 
transfer earnings to shareholders, and dividend payments have declined 
significantly. In fact, many corporations make no dividend 
distributions. My legislation will help to reverse this trend.
  Clearly, the expectation of receiving regular dividend payments from 
profitable companies can persuade investors to return their money to 
our equity markets. Investors relying solely on capital gains may find 
little reason to purchase stocks. Moreover, it has been estimated that 
dividends comprised half of the average return to shareholders in the 
decades before 1990. Without dividend payments, and few reliable 
capital gains, investors will remain on the sidelines.
  An increasing number of Americans have come to equate their financial 
well-being with the health of the stock market. The growth of stock 
investments held in retirement savings accounts makes it clear that 
this link is real. Encouraging the regular payment of dividends by 
ending this double taxation will have a strong positive impact on the 
retirement prospects of many people.
  There are a number of different ways to eliminate the double taxation 
of dividends, and some of these proposals have been introduced by some 
of our colleagues. Whatever the merits of those other proposals, none 
will have as direct an impact on the health of America's stock markets. 
Allowing the deduction of dividends from corporate income will provide 
a strong incentive to corporations to return to the practice of making 
regular dividend payments. In turn, these dividends will provide a 
positive reason for investors to come back to the market. The time has 
come to enact this important tax reform.




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