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Aron Giles's profile photo
I am a little skeptical about his core argument that the tax rate on the dividends paid to the highest earners has that strong of a correlation to the stock price. Professional analysts typically don't account for dividend taxes when trying to value a company in the S&P 500.

Reasons I think this argument is incorrect:

1) We had an absolutely enormous cut in the dividend tax in the Bush years yet there was no overnight doubling of stock prices. If you believe that a raise this small increase on the top earners would result in a 30% drop then don't you also have to believe that the bush tax cuts would result in a substantially bigger increase? But the trend over the decade following that event was for stocks to stay roughly in line with their historic P/E valuations.

2) He even concedes that for 75% of holders this has no material impact. So the value of the stocks has not changed at all for the vast majority of people, it was worth them to buy at price X before, it still is now.

3) These super high earners are going to put their money somewhere. If they can get a X% after tax return whereas before they were getting (X+1)% after tax isn't that still a heck of a lot better than hiding it under the mattress? What does the author hypothesize that they are going to do with the money instead?
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