US shareholders to get dividends tax-free
As part of an economic package designed to stimulate growth in the economy, president George W Bush is planning to abolish tax on corporate payouts to shareholders, the New York Times reported today.
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If this is confirmed, it would represent a dramatic shift in policy. Earlier plans were to halve the tax, but this new move would hit the US Treasury for a massive $30bn a year over the next ten years.
According to White House sources reported in the newspaper, the change would be introduced immediately, if it is approved. It is expected to give a massive boost to share prices pushing their value up by as much as 20%.
President Bush will unveil his proposals in a speech in Chicago, which is being seen as an important step in his campaign to win re-election in 2004.
Other proposals are set to include: an increase in the childcare tax credit; tax changes to benefit married couples and an extension of federal unemployment benefits.
The proposals have been slammed by the Democratic party, saying they would help the wealthy and increase the budget deficit.