NEW YORK (TheStreet) -- The fact that investors love dividends so much has always fascinated me. After all, they create a double tax hit that sends more money to the government and wastes capital.Here's how: The dividend-paying company pays taxes on its earnings before giving the dividend to shareholders, who in turn pay taxes on the dividends. If the company had simply held the cash, capital would have been preserved (assuming that the company doesn't waste it) and less would have flowed to the government in the form of taxes paid by shareholders.
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