Question

What are your thoughts on this: Debbie is a shareholder of XYZ company, which has its corporate headquarters overseas. She receives dividends from the company. She is taxed on those dividends and spends the rest of the money supporting her local businesses. The company decides to move its headquarters to the United States. There are now no dividends available because all of the extra revenue that used to be paid in dividends is now paid in taxes. The government takes the tax revenue and gives it to Libya in a foreign aid package.   Debbie receives no income from the company and thus spends no money in her town.
Which scenario is better for Debbie and the economy of the town in which she lives?
Wouldn't you rather have that money distributed to the shareholders who will then spend a good portion of it in the United States?

Answer 1

In my view, the first scenario is better for both Debbie and the economy of the town in which she operates. This is because in this scenario, Debbie receives dividend which increases her satisfaction levels for the investment she has made. Secondly, she is free to spend the money received by her in her own way.

The scenario is also good for the economy of her town since she spends the money in her town and helps the local businesses. Distributing the moeny to shareholders is also good for the US economy since it inspires them to make more investments in capital market which boosts growth in the country.