Microsoft's Shareholder Payout Raised US Incomes, Worsened US Deficit

[leQ]

When Microsoft issued an unprecedented $32.6 billion stock dividend payout to its shareholders in December 2004, it had a huge effect on the US economy, the US Commerce Department said this week. According to the agency, the payout raised the average income of US citizens and will likely worsen the nation's deficit. Overall, the US economy will be "become more negative" because of the payout, because so many of the company's shareholders are overseas.

http://www.windowsitpro.com/Article/ArticleID/45159/45159.html
amazing isn't it. that one company could have so much power.

[PROGRESSIVE1]

1. Gee, thanks Bill.

:eyes:

The ONE TIME that Microsoft actually pays out a dividend and is hurts us! :wtf:

:eyes:

[w4rma]

2. "because so many of the company's (owners) are overseas."

These things aren't even American corporations anymore. No wonder they are trying to screw us.

[Blue_Tires]

6. there's no such thing as an american-made car anymore,

either...the irony of it is I used to be a big 'buy american cars' type of person, because it used to be a source of pride for Detroit, and the companies were proud to use union labor...

[keopeli]

3. I don't think it's fair to blame Bill Gates for paying out his stock divid

dividends. Our free market allows anyone to invest in an openly traded company, not just to Americans. You can't just hold people's money indefinitely.

The problem here is NOT that Gates paid dividends.

The problem is that our economy is FUCKED UP. It is grossly skewed with a huge deficit. Gates and his company, no matter what you think of their product, helped pave the way for the boom of the 90s that paid off our debt and created a surplus with the leadership of Clinton. I have not seen any determinable evidence that Gates supported all those tax cuts during wartime and recession.

I have a question for you: how many business owners who are not Americans benefited from Bush*'s wartime and recession tax cuts, and how does that compare to the Microsoft dividend payout?

[lovuian]

4. LOL!!! This was the great Bush deal!!! LOL!!!

Dividends for the wealthy overseas people LOL!!!

[UncleSepp]

5. I don't understand how this affects the deficit

Can someone please explain?

[msgadget]

7. Wow,

that's truly incredible. Is there any way to boost our economy if most of our large investors are foreign and our major industries are multi-nationals? That's a real question, btw, not a rhetorical one.

[ElaineinIN]

8. Just guessing on the deficit question

My understanding is the MS sat on a bunch of liquid funds and didn't pay dividents due to the double taxation issue (for a C corporation, you don't get a deduction for the dividends you pay out to shareholders, so the Corp pays tax on its earnings and then the shareholder, when they receive the income, pays tax on the earnings).

Of course, in our ownership socieity, taxation of corporations and wealthy stockholders, that just plum unfair! Shrub wanted to do away altogther with the tax on dividends, but didn't get that far. Instead, he did get a qualified dividend rate, so the income tax on dividends from MS are far lower than regular rates.

As a result, MS annouced a huge distribution. Now, alot of that liquidity will not be taxed at the corporate level (less income to the gov't), the dividends that are received by US citizens will be taxed at a lower rate (less income to the gov't). If they are received by a non US person, that person still should report the income as US source income (which might or might not happen, less income to the gvot') and even if they do properly report it, the future earnings are going to be non-US source income and not taxed again (less income to the gov't), whereas they would have been if held by MS or reinvested by a US person

I'm just guessin, but that's my analysis.

[mulethree]

9. Bogus Article - Bloomberg reporter misinterprets

The BEA - Bureau of Economic Analysis, presents all its data - monthly, quarterly, yearly - all on a 'annual basis'. The way they calculate this, the monthly figures will show a $288 Billion (24 X 12) effect and the 4th quarter will show a $96 Billion effect (24 X 4).

So, their NUMBERS show a really huge effect and they are explaining it to people who use their numbers.

It didn't have a huge effect on the economy, and they didn't say it does. It does have a huge effect on their annualized statistics - particularly the 12x magnified result on the December stats.

$32 Billion is 0.32% of GDP, but it will LOOK like 3.84% to people looking at annualized December numbers.

The Bloomberg guy who wrote the story seems to not understand what he's talking about.