Democrats to TRIPLE dividend taxes under Obama? What about the effect on retirement income? 

The Wall Street Journal reports this morning that Democrats are looking to take a huge bite out of dividends:

As the big tax increase day of January 1, 2011 approaches, the Democrats running Congress are beginning to lay out their priorities. Get ready for bigger rate increases than previously advertised.

Last week the Senate Budget Committee passed a fiscal 2011 budget resolution that includes an increase in the top tax rate on dividends to 39.6% from the current 15%—a 164% increase. This blows past the 20% rate that President Obama proposed in his 2011 budget and which his economic advisers promised on these pages in 2008.

(See "The Obama Tax Plan," August 14, 2008, by Jason Furman and Austan Goolsbee: "The tax rate on dividends would also be 20% for families making more than $250,000, rather than returning to the ordinary income rate.")

And that's only for starters. The recent health-care bill includes a 3.8% surcharge on all investment income, including dividends, beginning in 2013. This would nearly triple the top dividend rate to 43.4% in Mr. Obama's four years as President. We suppose the White House would call this another great victory for income equality.

Blogger Cuffy Meigs wonders: "How many elderly Tea Partiers rely on dividends as part of their fixed retirement income?" Good question -- the dividend tax isn't just a tax on Wall Street fat cats. The WSJ notes: "The millions of Americans who receive dividend income—most of them not rich— need to begin adjusting their investment strategy accordingly. And don't forget those Obama campaign promises [about not raising taxes] from 2008."

No kidding.

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Mark Hemingway

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