April 23, 2003 - Politics and Basketball have much in common. Basketball coaches and Politician make their livings by distracting the public from the everyday mundane aspects of life. Its just that basketball coaches in the 21st century make a lot more money than do politicians or even Presidents by doing it. A basketball coach landing a job in a major collegiate program becomes an instant millionaire. A fellow becomes President only after he has become a millionaire or at least become great friends with several of them. An ex-basketball coach looks forward to a comfortable retirement if he has been successful. An ex-President can look forward to access to the big bucks, whether it comes in the form of million dollar speaking fees and gifts from other millionaires like Ronnie Reagan or publisher’s advances for unwritten books like the most recent ex-President. Is it any wonder that Presidents adopt policies that tend to favor society’s biggest winners while making sure that the rest of the people are distracted by events from the reality of what those policies will mean in their every day lives.

Take, for example, the tax-cut that the current President’s Men are trying to force through Congress. One of its features is the elimination of individual income taxation of corporate dividends received by individuals. The President tells us that the policy will encourage corporations to create jobs to replace those lost in the persistent economic recession that commenced the century. It will, at the same time, encourage the corporations to declare dividends to reward the investors. It is a policy intending to correct the evil of double taxation – taxing the same money, first as corporate income and then when it is distributed, as dividend income to the investor.

Everybody can agree that double taxation is an evil that needs to be corrected. If double taxation is to be corrected there is a more efficient and less complicated way to accomplish it, simply make dividends deductible to the corporation. That is a more direct and effective way to prime the corporate pump and stimulate the industrial economy. But that doesn’t reward the people who are expected to contribute the $200 Million that the President’s Men want to spend on the 2004 campaign.

Before we get distracted too much by the President’s slam dunks we need to take a close look at the score. Most ordinary folks who have extra cash to directly invest don’t buy stocks. They put it in CD’s or secure government bonds; they buy rental real estate or they start small businesses. Income from those investments will continue to be taxed. Most small business corporations are not paying an income tax at all. They are closely held businesses electing Subchapter S treatment – the corporate income is taxed as ordinary income to the owners whether it is distributed or not. Under the President’s proposal only those folks who are directly investing in the stock market will gain a benefit and those folks aren’t the Average American. When the President says that he want you to keep more of your money, don’t be distracted by the fast break. Remember that what he really means is that they will keep more of their money and the rest of us will still have to pay for the tickets to the big games in Afghanistan, Iraq and the rest of the games on the schedule.