Two Different Visions of Tax Policy Rea S. Hederman Jr. The Heritage Foundation Naples, FL October 2009

President George W. Bush’s Pro-growth Economic Legacy “ We document a 20 percent increase in dividend payments by non-financial, non-utility publicly traded corporations following the tax cut. An unusually large number of firms initiated or increased regular dividend payments in the year after the reform. As a result, the number of firms paying dividends began to increase in 2003 after a continuous decline for more than two decades.” “ Dividend Taxes and Corporate Behavior: Evidence From the 2003 Dividend Tax Cut” Chetty and Saez

“ We document a 20 percent increase in dividend payments by non-financial, non-utility publicly traded corporations following the tax cut. An unusually large number of firms initiated or increased regular dividend payments in the year after the reform. As a result, the number of firms paying dividends began to increase in 2003 after a continuous decline for more than two decades.”

“ Dividend Taxes and Corporate Behavior: Evidence From the 2003 Dividend Tax Cut” Chetty and Saez

Every Good Idea Deserves a Tax Hike Chairman Charlie Rangel: $544 Billion for Health Care New Surtax on the Wealth Up to 5.4%. New Federal Top Tax Rate on Earnings: 50% Heritage Analysis: Half of those Affected are Small Businesses 450,000 Fewer Jobs Annually

Chairman Charlie Rangel: $544 Billion for Health Care

New Surtax on the Wealth Up to 5.4%.

New Federal Top Tax Rate on Earnings: 50%

Heritage Analysis: Half of those Affected are Small Businesses

450,000 Fewer Jobs Annually

The Upcoming Fight Expiration of President Bush’s Tax Cuts at end of 2010 Capital Gains and Dividends go from 15-20% Marginal Rates increase: 35-39.6%, 33-36%, 28-31% Death Tax returns to Prior Rates

Expiration of President Bush’s Tax Cuts at end of 2010

Capital Gains and Dividends go from 15-20%

Marginal Rates increase: 35-39.6%, 33-36%, 28-31%

Death Tax returns to Prior Rates

Highly Progressive Income Tax Is Still Not Progressive Enough