There are hints that the White House and outside tax cut advocates may cope with weaknesses in the stimulus case by advancing other arguments for a dividend tax cut.
White House officials have already begun portraying the cut as a corporate governance reform, saying it would give firms an incentive to pay out more in dividends and rely less on the kind of stock price manipulations behind many of the recent scandals.
At an American Economic Assn. meeting Friday in Washington, Stanford economist Robert E. Hall said the cut would represent an important step in shifting the nation's tax system away from its reliance on income.
Conservatives have long sought such a shift on grounds it would make the economy more efficient. Liberals and moderates have opposed it because it would require jettisoning the nation's long-held belief that the rich should bear a heavier burden of taxes than the rest of the nation.
Hall wryly counseled the White House to not dwell on the debatable details of how the dividend tax cut would help, and "just say it is good."
The debate may yet come to that.
