Iowa Senator Fights to Keep Dividend Tax @ 15%

Hey, if the dividend tax rate of 15% is ended that is gonna cost all us dividend investors twice -- higher taxes and potentially lost value. Get involved in the fight because there is no guarantee that the morons on the Hill are going to renew the low tax rate thru 2010.

Fortunately, Iowa Senator Chuck Grassley (Republican) is taking up the fight. According to today's Wall Street Journal, he has directly questioned the Congressional Budget Office's estimates that if the rate is extended it will 'cost' the treasury $20 billion. He points out in a letter that their projections have been awful for the last 30 years. Check out his letter.

For example writes Senator Grassley, "capital gains taxes are now projected to exceed the amount originally projected under higher capital gains tax rate (of 20%) that prevailed before 2003." Their answer was basically that they were wrong.

Call your congress persons and senators (or write an email) and tell them to keep dividend taxes low and grow the economy.

BTW, here is a biotech blogger who predicts that Johnson & Johnson is going to raise its dividend. The author, Eddy Elfenbein writes that at a p/e of 15, the stock is as cheap as it has been in 18 years. (check out the graphs on the first link in this paragraph). The yield of 2.6 is a little low for me, but the historically cheap price makes it somewhat attractive. Any thoughts?

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