If I understand correctly, if person A invests in a mutual fund that gets dividends and re-invests all earnings, and person B invests in a mutual fund without dividends, person B has a slightly easier time filing taxes, and also has lower taxable income. This is, of course, assuming everything else is identical between the two scenarios (which in reality it rarely is).
Person B only has income when she chooses to sell shares of company B, while person A has to tax income taxes every time she receives a dividend, as well as whenever she sells shares.
What am I missing here? If dividends make filing taxes more burdensome and also cause people to pay more taxes, why does anyone want dividends?
Submitted February 18, 2021 at 04:11AM by jlemien https://ift.tt/2NArVt1
