Exempting dividends, especially, would be seen as a gift to the rich.
Last August Japan, which has the OECD's highest corporate-tax rate, proposed exempting dividends paid to Japanese multinationals by foreign subsidiaries from tax, even as it planned, in effect, to raise more from individuals by increasing value-added tax.
However, to stimulate dividend repatriations from Japanese-owned foreign affiliates, the Japanese government introduced a foreign dividend exemption system in 2009 that exempted dividends remitted by Japanese-owned foreign affiliates to their parent firms from home-country taxation.
Dutch tax law also exempts dividends and capital gains from foreign subsidiaries, making the country an ideal home for holding companies, lawyers and bankers say.
In the same month Britain unveiled a budget that, like Ireland's, promised to clobber wealthy individuals but, like Japan's, exempted dividends paid by foreign subsidiaries from tax.This forbearance is all the more remarkable given that corporate-tax rates in many countries are far lower than they were in the 1990s (see chart).
The George W. Bush proposal to exempt dividends from income tax, they said, would benefit stocks with high dividends.
Only the remaining 15percentt of existing preferred stock is eligible for tax-exempt dividend payments.
But Mr. Scapell said that some companies might choose to redeem existing hybrid securities and issue new preferred shares that would qualify for tax-exempt dividend payments.
A company that actually paid taxes would have tax-exempt dividends, which might mean a higher stock price.
