ichudov@algebra.com (Igor "FUCK MNE HARDER" Chudov @ home) writes:
Dr.Dimitri Vulis KOTM wrote:
3) Company pay shareholders and costs, $30 is left
Again, no. Shareholders come AFTER payroll and costs.
Dividends are NOT tax-deductible in the U.S. On the other hand, interest is Therefore it's sometimes more profitable for a company to raise money by issuing bonds (debt) and paying tax-deducuble interest than by selling its stock (equity) and paying non-decuctible dividentds to stockholders.
This statement is very questionable. Various classes of shareholders (such as pension funds and IRA account holders, among others) pay no taxes on dividends. Corporations pay taxes only from about 30% of dividend income that they receive.
Igor, you begin to sound like an American - i.e., even more stupid than the 50%sovok that you are. I never said anything about the taxes paid by the dividend _recepients.
There is, in fact, a neat theorem that says that (*_under certain assumptions_*) the value of a firm does not depend on its capital structure.
Igor, you begin to sound just like Timmy May - talking about things you know nothing about. Yes, there's a famous theorem by Franco Modigliani and Merton Miller, the Nobel prize winners which says that ABSENT TAXES, the value of the firm doesn't depend on its debt-to-equity ratio. M&M also show that under U.S. tax laws the best capital structure is 100% debt (again, ignoring other available deductions, such as depreciation, and increased risk and cost of borrowing as the debt increases). "The value of the levered firm is the value of the levered firm plus the interest tax shield (the amount of debt times the tax rate)." Companies would borrow less (and people would take out mortgages on their residences less) if the interest payments weren't tax-deductible.
5) I pay 40% in taxes, so $18 left
I'm afraid you are conflating the MARGINAL rate (and when you consider federal, state and local taxes varies by state) with the AVERAGE rate. Here in FL. for example there is no state or local income tax. With tax sheltering, mortgage deductions etc. no one pays 40% -- the middle class pay a lower average rate, the upper class pay a much lower average rate.
That varies with the locale - here I pay the federal income tax plus the Ne York State income tax plus the New York City income tax. I once had a job o from IBM at $79K/year in Boca Raton (which I eventually didn't take anyway) it's a ridiculous salary in NYC, but a decent one in Florida.
You forget about alligators.
And sharks. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps