Why MSFT hates dividends.

Why MSFT hates dividends.

Why MSFT hates dividends.

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Jan. 4 2003 2:39 AM

Double Secret Taxation

The Fray defends the tax code, more or less.

Double secret taxation: Re-reacting to the Daniel Gross's attack on the drive to reduce taxes on dividends, the Moneybox Fray moves in several directions. Apparent newcomer snsh takes Gross to task for minimizing the Microsoft example here:

Microsoft is the poster-child of the issue, due to their $40 billion savings account … [MSFT] is controlled by long-term investors (Bill Gates and senior Microsoft employees) who have been gradually selling off shares, paying the lowest tax rate (20%) on their stock. If instead Microsoft paid dividends, Bill Gates would pay the highest tax rate (40%) on the dividends … So, it is in the interest of the people who control Microsoft to not pay dividends.

Is this bad? I don't know.

That moment at the end, where snsh refuses to leap from the description of a system set up to benefit particular shareholders to a condemnation of it, is particularly salutary. snsh amplifies that unwillingness to give an easy answer in a later post, in defending the complex tax code:

To prevent loopholes, taxes should be spread out over everything -- income, sales, excise, gas, property, payroll, dividends, capital gains, etc. Yes, with multiple taxes there will sometimes be triple-taxation, but as long as the net tax is usually reasonable (i.e. 40% not 70%), then intelligent accountants will find ways around the worst cases and most everyone will be okay.


Why are these such attractive posts? Because they take on the issues that are near and dear to the whiny hearts of very different political persuasions (plutocratic conspiracy; the evils of the tax code) and make it clear that the whining is a reflex, not a measured response ...

Means-while … ChasHeath looks to score some non-whiny political points here "The biggest double-tax is the payroll tax. The payroll tax gets taken out, and then you're taxed again on the full income, unless you earn over $84,000 or get paid in incentive stock options" and does our homework for us here:

One of the assumed truths that we've been hearing about corporate dividends lately is that dividend payments have been out of favor lately, compared with historical norms.

And what does he find when he runs the data series?

[C]orporations have been paying out a higher fraction of cash flow through the 1990s (rising to around 40%) than through most of the post-war period, and the low point for payouts was during the 1970's and 1980's (around 25%) …


Material Boi: Sometime Microsoft adversary David Boies has declared the mistakes in Tyco's corporate earnings "not … material to the overall financial statements of the Company"; Daniel Gross asks "Since when is a $382 million earnings restatement 'not material'?" The Moneybox Fray, naturally has an answer. As mfbenson puts it here:

$382 million is immaterial when it's less than 5% of the stated quantity.

In this case, if the stated earnings were over $7.64 billion, the $382 is immaterial.

And you thought accounting was an exact science …

Lawyers in the hands of an angry Fray: Kurl the political balladeer is back, with two parts of a John Edwards saga. One verse:

Whether sunshine or rain

I'll be feeling your pain

I'm a champ of the "regular guy"

Lobster tails, caviar

I'm a rock 'n roll star

With a limitless money supply … 11:30 p.m.


Using a warhead as a fulcrum: The Fray hates Fred Kaplan's suggestion  that the U.S. appease North Korea, but almost universally acknowledges that American policy is awash in bad game-theory scenarios. As Zathras puts it:

[F]aced with a negotiating situation in which one has no leverage, how does one restructure one's position so as to recapture leverage in the absence of any reciprocal step by the other side?

The thread takes up the possibility of American disengagement from the peninsula. TonyAdragna, gmat and Publius join the mix but one of the most interesting posts comes from atsjackson who spins the scenario out to include a nuclear-armed Japan. "There is probably no easier way to achieve a nuclear-armed Japan than to propose the withdrawal of US troops not only from Korea but also from Japan." But for him, that's a good thing, because it would contain China:

The Chinese have actively supported both Pakistani and North Korean programs with little concern about the outcomes. This support may be curtailed in the future if they see the rise of a nuclear-armed Japan as a response to North Korean threats.


Abre_los_ojos thinks nuclear proliferation could be even more salutary. Just the threat could convince China to push on North Korea—instant leverage! He imagines it this way:

[T]here is an indirect China card which the US may choose to play (and I think actually is, covertly). And that is to threaten, err, "suggest to", the Chinese that if the Chinese do not exert every effort viz. their wayward ally to comply with the nuclear non-proliferation treaties, etc., then the US may consider encouraging South Korea, Japan, and/or even Taiwan, to develop their own nuclear arsenal(s) as responses.

(Strategic proliferation is a popular suggestion in the War Stories Fray. Thrasymachus proposes devolving nuclear weapons to South Korea here.)

A non-Fray plug: in the not-widely-read Christmas edition of Today’s Papers, Eric Umansky summarized an LAT analysis this way: "While the Clinton White House assumed that North Korea was off its rocker and thus wasn't a good partner for a game of chicken, the Bush administration thinks that Pyongyang is rational." So, is North Korea rational? Ananda thinks clearly not


Brave 'art: One of the more vexing movie-critical problems of the year (at least for our Movie Club authors) has been the ending of Adaptation: how do we take it? simparker tries to sort it out:

The reason I felt betrayed by Adaptation's climax was because, just as Mr. Ebert claims, it was thumbing its nose at the members of the audience who didn't understand how "brave" it was ... It's okay to thumb your nose at the start of such a movie--pre-empt criticism, confound expectation, etc. But by the end you should be making a movie for those in the audience who DO understand how brave you are.

BML provides another compelling reason to see Gangs of New York here. It drives home the shock of national politics.

[The gangs'] surprise, and our own, when the Union troops come into the city to crack down on the mob can be attributed to their narrow-mindedness -- the national power that they deride or dismiss had already fallen hard on their neighbors … [T]he essential futility of the feud is underlined by the troops' complete indifference to it at the end, when the gang-fighting is finally revealed as an obstacle to progress …


It takes an evillage: Responses to Christopher Hitchens' defense of "evil" included well-wrought objections, like this from RavenT:

When Bush uses the word evil he says to the world that America is incapable of recognizing gradations and finding fault with our own actions, and he says to his constituents that we need not seek a finer understanding of situations abroad. All that we need to understand is that our enemies are evil …Liberals can be tough-nosed and appreciative of subtlety and nuance. We don't need a blunt instrument like "evil" to rally around. Why does Christopher Hitchens?

Petersattler reads the word from an opposite direction:

"Evil" is the ultimate explanation for the actions we take against bad people. It is out failsafe defense. Indeed, the term implies that we human beings could take no other course (than war, than execution, etc.) against something that is so patently inhuman. "Evil" is our way of saying that we had to react the way we did. The other side's actions compelled us. The devil made us do it.

And it is this loss that Hitchens really fears – the loss of evil as a prescriptive tool …


The Rules of UnAttraction: Dear Prudence features a letter from a woman who is "not attracted to" her husband (although he's a good guy); PeterP asks "What does ‘not attracted to’ mean to you?" doodahman helps the correspondent reckon with her "inner horny self" here

Holy holiday zeugma!: Also in Prudieville baltimore-aureole's post hitches credit-worthiness to a briefcase full of sex toys. (A Ditech commercial for the Robyn Byrd show?) …

Voices of modern industry: While people are slightly unnerved at the prospect of billboard's monitoring their car radios, DavidDavenport-12 adds this wrinkle to the what-makes-it-work Explainer:

[W]hen a radio receiver is tuned to a certain radio frequency carrier -- i.e., radio station -- the radio's internal super heterodyning circuitry amplifies the radio carrier signal to a certain extent and re-broadcasts the signal, albeit weakly, by means of the radio receiver's antenna.


KenKirkland disagrees (I think) saying MobilTrac

must be looking for the upper side band product of the mixer, rather than leakage from the local oscillator. Clever of them.

(If this seems too technical, you can read a recent Slate article on "super-hetero dining" here …) 1:30 a.m.


Tuesday, Dec. 31, 2002


Mr. Feldstein's NBERhood: Daniel Gross argues that the recession began under Bush, but would have under Gore—or even Kang. For TheRealMaxWood, the argument that the president is largely irrelevant cuts both ways here:

Of course if you listen to the Clinton Legend Preservation Committee, you would think that the boom years of the 90s were all Clinton's doing. The reality is that Clinton had about as much control over the economy as the guy in the skipper suit has over the submarine at Disneyland.

RavenT, though, makes the point that inheriting the business cycle is one thing, helping it off the cliff is another here:

What we have so quickly forgotten is that Bush consistently talked down the economy in the first months of his presidency, in order to boost support for his tax cut, as a stimulus device. Which is worse I won't venture to say: that Bush abused his influence as President to encourage economic skepticism, or that Bush denied repeatedly his original tax cut argument, that our economy was humming along so well we could afford it.


For one-stop blame shopping, see Game_Warden's multi-culpa here. ...

Icky shuffle: The Brave New World Fray is one of the best, in part because Jim Lewis has jumped in to defend his piece on cloning and kinship terminology (his threads begin here, here, and here). Many Fraysters objected to Lewis' point that the woman who carried "Eve" to term should not be called her mother. For the Fray, the cultural or linguistic situation in which a parent is genetically identical to a child is no different from one in which they are not genetically related; that is, cloning poses the same problem as adoption. So petersattler here:

Both the press and the public casually call these completely foreign and biologically unrelated humans the daughters of their so-called parents just because those people provide the girls with love, a home, and a family. …

As Lewis suggests, we need a new name to reflect the fact that these children are biologically "nothing" to their "mothers." We need a name to shock our sensibilities and call us back to our natures. A name to highlight the insincerity of this false familial bond. I propose "naughters."

(Petersattler also provides a handy list of Lewis' lexicon of the monstrous here. Temaj2 is less Swiftian and more Levi-Straussian about the terms of kinship here.) Lewis' sharpest answer comes this morning:

I did not say that genetics always, or even often, determines kinship. I didn't say it, I didn't imply it, I don't believe it. But I do think that when another kinship relationship is already established -- as, in cloning, the twin relationship is from the get-go—it's very dodgy to try to superimpose a second kinship relationship. It is creepy, it is gruesome.


And the audience for this insistent conjuring of creepy-but-not-incestuous couplings? People who do think relatedness matters. As Lewis puts it:

Look, you may not think genetics has any interesting relationship to parenthood, and I may not think it does, but the sort of people who would opt for cloning, were such a thing possible, presumably do -- otherwise they'd just adopt.

There is much more to this discussion, some of it appended below the original article, and still more in the Fray. ...

Star power: New year, new stars (in alpha order) to daveto, stalwart of the Best of the Fray Fray and incisive Fray citizen wherever; Engram, who enjoys the Goffmanian theatricality of the whole thing, Geoff, who gets his first star before Ang_Cho gets his second (and who is funny and pointedly smart); rob_said_that, culture maven and moderating force in the Movies Fray; Ted_Burke, poet, critic, recent defender of Joe Strummer, and Temaj2, who knows about clones, kinship, orcs, and elves. Stop by the Best of the Fray Fray to pick them up. Lastly, several star posters who have returned from absences dating back to the pre-registration days (more or less) can reclaim their stars if they desire: Ananda, TonyAdragna, and Thomas-2. For that kind of maintenance, stop by the Fraywatch Fray. (I still can't peel off unnecessary numbers, but should be able to soon.) ... 9:25 a.m.


Monday, Dec. 30, 2002

Getting out your aggression: Responding to Mickey Kaus' critique of a Neil Lewis NYT piece, that called the incoming Republican Senate "aggressive," zinya notes that the context is key here:

He was discussing the incoming Senate vis-a-vis judicial appointments. He cited that … Orrin Hatch is already taking the historically unprecedented step of publicly advising Supreme Court justices to do what they have apparently never done before, namely to "out" themselves already mid-Court-session as to their intention to retire so as to give the GOP more time to process, plan, whatever they intend … Now what word would you use for such politicking? "Aggressive" sounds reasonable to me ...

" We haven't done that": As the news broke that American missionary healthcare workers had been killed at their Baptist-supported hospital in Yemen, Don was the first to quip "Tell Patty Murray." (Anthony made the same point here.) ...


Movie Bits:

1. On Chicago: Frequently criticized for "hating everything," David Edelstein now gets it from the other side. For calling Chicago "the most explosively entertaining movie musical in a couple of decades" and predicting it will bring the movie musical back to life, ElboRuum asks:

[I]s it possible for a reviewer to simply say that they liked something WITHOUT actually claiming that they were overrun by the bow shock of some earth-rending, mega-seismic, paradigm-shifting entertainment bogey on the radar?

Rob_said_that explains that there is a difference between the Peter Traverses of the world and the Edelsteins:

It's the nature of reviewers to be hyperbolic and sensational. The good ones keep it down, but it's always there anyway, just beneath the surface, glistening like coral … If a reviewer is always effusive, it's one thing; if only in moderation, something else again.


Christofurio objects to Edelstein's contention that Oklahoma!—"an aberrant outgrowth of stage naturalism"—killed the musical. To Cf, 1. musicals didn't die; 2. O! isn't naturalistic (choreographer Agnes de Mille saw to that) and 3. South Pacific is worse. Willie responds with first-hand Agnes material and a spirited defense of SP's anti-racism. The thread is good.

2. On The Pianist: Widyadari tries to make Edelstein's positive review jibe with his revulsion at Polanski's criminal past:

This movie, by your account, is a sympathetic portrait of a full-grown man who escapes imprisonment (by Nazis, of course) but lifts not a finger to prevent the death of his family or his community. At it's close, you are convinced that you "have no right" to judge the man's refusal to act … This film sounds like an unsubtle apologia for Polanski's choices in life, outrageously camouflaged in a Holocaust story. It is a pity you were lured into ratifying his point of view.

The problem of finger-lifting exercises Publius as well; he notes that there is more to the "SS captain" than "impassivity." Aside from being regular Army, the captain—Wilhelm Hosenfeld—apparently put himself at great risk to save Szpilman and other Jews.

Szpilman tried to find him after the war and located him in a Soviet prisoner camp but, even with many Polish Jews helping, could not gain his release. Hosenfeld died still a Soviet prisoner in 1952. ...

Some holiday leftovers: For an exceptionally well-turned series of slams, see Shiela-Samples on Cass Ballenger here (she also gets the Johnny Dangerously award for responding to zoombador's "juxtaposition of adverbs" here.) Most important, AdamMasin has given out the first annual Worst Of The Slate Awards here. His most-weekly WOTS column is must-read. ... 10:45 p.m.