I don't see how too much capital could cause a recession, or indeed how it's possible to have too much capital. Do you mean too much credit, too much borrowed capital? The notion of too much borrowed capital fits with both Austrian and monetarist theories of recession.
Since I first studied taxs as an undergraduate accounting major, I've opposed the double-taxation of dividends that the federal government imposes under the federal income tax. I've never heard a good reason advanced for taxing someone's income twice, or, for that matter, even much of a bad reason. If you read the debates in Congress over passage of the first federal income tax law under the 16th Amendment (which incidentally wasn't the first constitutional federal income tax, contrary to popular view) you'll see that they planned to tax income closest to the source, which is why they imposed an income tax at the corporate level. That also taxed the income regardless of whether the corporation actually paid it to the shareholders or not. They didn't plan to tax dividends, and indeed under the first law they passed didn't they did not impose the normal income tax on dividends. They did impose the high-income surtax on dividends, which might be regarded as double-taxation, but that's not how they saw it. Rather, they placed the normal tax directly on the corporate income, and the surtax only on aggregate individual dividends above a very large exemption, which they saw essentially as simply a higher bracket on corporate income, but only for wealthier individuals (if I'm explaning it at all lucidly). During World War I, however, Congress basically taxed everything in sight--and a good deal hidden from sight as well. :) Congress applied the normal tax to dividends during its taxing binge and, well, just never let go. Since then dividends have suffered double-taxation in America. Of course the majority of Americans didn't pay any income taxes until World War II, but a substantial fraction did pay throughout the 1920s. David Levenstam In a message dated 1/11/03 8:12:18 AM, [EMAIL PROTECTED] writes: << I was wondering what you all's opinions are on the elimination of the dividend tax President Bush is endorsing. In my opinion the recent recession has been caused by too much freely available capital. Tech and growing companies have always argued that because of double taxation it made more sense for a company to re-invest its profits instead of giving them to share holders. If there was no dividend tax durining the 90's we probably would not have had as much growth but we also would not have had such a sever recession either. Is this reasonable? >>
