By Rick Glaze

European markets recovered Friday, after the deadly terrorist bombings, as shocked Londoners went back to business as usual. In the United States, falling oil prices combined with the 146,000 jobs created in June to help the Dow Jones Industrial Average move up 146 points to 10,449. The Nasdaq composite index climbed 37 points to 2,112 and the S&P 500 was up just shy of 14 points to close at 1,211.

The dividend yield on the S&P 500 has increased from 1.75 percent last December to almost 2 percent as of late June. The dividend is the amount a company pays out of its earnings directly to shareholders. Increasing dividends can be a sign of a healthy company and often improving earnings. Dividend yields typically were 3 percent to 5 percent during the 1980s and even through part of the 1990s, in part because of higher interest rates. But actual dollars paid in dividends to shareholders is at a record high mark.

Do higher taxes bring more revenue to the government or do they choke off economic growth? The debates in Washington should include this question, but too often they are simply a money grab for more, more and more. The federal receipts from taxes withheld from paychecks is up a respectable 7.3 percent for this fiscal year-to-date, according to a recent Wall Street Journal article. But as astounding as it may seem, the income from capital gains, dividends, self-employed unincorporated businesses and other non-withheld income is up 35 percent this year.

The only tax laws passed lately have been tax cuts, yet receipts are higher by a meaningful number. At lower tax rates, people keep more of their money, invest and spend more which supplies more capital to expand businesses, employing more people who pay more taxes. That is how the tax revenue grows.

Rick Glaze is the president of Glaze Capital Management Inc. of Los Altos and a registered representative offering securities through First Allied Securities Inc.