Did lee run out and raises to reporters and buy more presses

Reference no: EM131500248

Question: A writer for Newsweek had the following reaction to the 2003 cut in the personal tax rate levied on dividend income: "When I paid lower taxes on the dividends I got from Lee Enterprises, an Iowa-based newspaper chain, did Lee run out and give raises to reporters and buy more presses? I think not" [Sloan, 2004, p. 34]. Explain the problem in this way of thinking about the incentive effect of reducing dividend taxation. Use the concept of the user cost of capital as a vehicle for your discussion.

Reference no: EM131500248

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