The excessive exuberance that Wall Street suffered for years, and for which we are all still paying, would have been less severe had investors focused on dividends rather than earnings, marketshare, and new economy wealth from thin air. But to make the approach effective, the double taxation of dividend income must end, no matter how ideologically satisfying it may be.
It is something of a canard to say that dividend income is taxed twice. In theory, the firm generating the income pays tax on it under the corporate income tax, and then, it is taxed again as income to the investor when it is paid to the shareholder. By the same token, a worker is taxed on income that will later be taxed again when it is spent on living expenses.
Still, if it will shift the focus of Wall Street to money that the firm has generated and can pay out to shareholders, let the dividend be taxed only once. Then, let the market focus not on intangibles but rather on how much the company will be able to pay per share this quarter. No need for long-term planning, which seems beyond the ken of most of the Street, nor any possibility for creative bookkeeping. The stock price would then reflect not expectations of revenue streams in the distant future, but rather would be tied directly to real profits.
There is, of course, the risk of over-paying, and a resulting cash-crunch, but that just might cause firms to act with greater restraint. And directors' pay? Let it be a dollar a year, plus dividends, no options.