Should the U.S. Follow China’s Dividend Tax Relief?

We have to give at least a little credit to Chinese regulators. While they let their market skid out of control in the past year, equally unable to stop the bleeding during July and August of this year, China’s newly proposed dividend tax rules are a simple, clean and bold change. And they just might quell some of the volatility plaguing China’s market. Granted, the measures aimed at discouraging short-term trading by lowering taxes on dividends of long-held positions won’t solve all of the nation’s equity market woes.

Yet, it’s intriguing, and begs the question for U.S. investors: Could our regulators ever put a similar tax plan in place (even if just temporarily) to calm our markets? U.S. overseers may want to watch and learn from China, and at least mull over similar measures (focusing on capital gains rates rather than dividend taxation) if and when it looks like we’re headed into another financial crisis. China’s quirky idea just might make a difference.

Source: InvestorPlace

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