Dividends as Upward Cash Escalator

“paying out the dividends, and dividends from one company received by another are tax-free.”

“It’s a wonderfully interactive and self-supporting system, the in¬ dustrialist’s dream: cash flows in as revenue from outside customers; flows through to other subsidiaries to pay for goods and services; moves on, through, and across divisions. Ultimately, cash is kept in- house and paid further along the line as dividends, profits, accounts payable, and interest to parent companies. It’s the capitalist system at its most functional, the ideal envisioned by Adam Smith in The Wealth of Nations which, more than a tome on economics, is a model of how the world works, when it works, to maximize efficiency and profitability in mercantile operations.”