Yeah, there have been a lot of people in the past who ran for President who recommended a national sales tax. I think Forbes and Huckabee are two of the more ´famous´ ones. There are a bunch of reasons why it would work better. Off the top of my head... it is simpler and would require a much smaller IRS. The second thing is that it would force under-the-table and illegal (prostitution, drug dealers) to pay taxes... and finally, to a small degree it would incentivize savings ( or discourage spending).
One major problem with jacking up taxes on dividends is that it takes money away from retirees who depend upon dividends for income - particularly these days when bond yields are so low overall.
They should be investing in internet IPOs.. It´s better to burn out, than fade away!! Yeah, I don´t think anyone is going to be raising dividend taxes any time soon, but I don´t think there is any political will to reduce them either.
What I don't understand is why do dividends have to be taxed at a flat rate? I once lived in a country where.. well the system was more complicated but basically after a few twists and turns, your dividend income got added to your yearly salary in the tax papers, and taxed at the same rate as your salary was taxed at. This automatically made it progressive (which I do not consider to be a bad thing) but it was especially good for those with low income outside of their investments. When dividends are taxed at a flat rate (usually a pretty damn high one) it makes it really hard for people to survive on that income alone.
I can't be the only one here, can I? http://jeffduncan.house.gov/full-list-obamacare-tax-hikes $123 Billion: Surtax on Investment Income (Takes effect Jan. 2013): A new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income:Capital GainsDividendsOther*201215%15%35%2013+23.8%43.4%
Wait... surely the dividend tax rate didn't jump from 15% to 43.4% in a single year? http://taxfoundation.org/article/united-states-high-tax-burden-personal-dividend-income According to their research the highest dividend tax rate, including federal, state and local taxes, is in California at 33%. Still over 10% lower than the max one stated in the numbers above. And if Californias state rate is 13.3%... with many other states around the 10% mark... then were federal taxes on dividends only around 5% in 2012? (compared to 25% now)? Either something really strange is going on, or then this Jeff Duncan dude is a politician and representing the opposite party from Obama's... so his website might NOT be the best source for accurate information.
It's accurate, as is this one. http://www.atr.org/full-list-ACA-tax-hikes-a6996 Capital Gains Dividends Other* 2011-2012 15% 15% 35% 2013+ (current law) 23.8% 43.4% 43.4% 2013+ (Obama budget) 23.8% 23.8% 43.4% 4. Obamacare Surtax on Investment Income (Tax hike of $123 billion/takes effect Jan. 2013): Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income: Bill: Reconciliation Act; Page: 87-93 Capital GainsDividendsOther*2011-201215%15%35%2013+ (current law)23.8%43.4%43.4%2013+ (Obama budget)23.8%23.8%43.4% *Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8% surtax does not apply to non-resident aliens. Read more: http://www.atr.org/full-list-ACA-tax-hikes-a6996#ixzz3chD9NWqj Follow us: @taxreformer on Twitter
Agreed. The current tax code is a train wreck. And the amount many of us are paying is nothing short of insane. Between federal income tax, state income tax, capital gains, social security, medicare, gasoline tax, property tax, sales tax, et al., the half the country that actually pays taxes is getting picked clean. I'd favor some variant of a flat tax, but a (low!) national sales tax could be considered. It frankly doesn't get a whole lot worse than the system we've got now.
That dividend tax is actually calculated with and without the Bush tax cuts factored in. With the Bush tax cuts, it's actually 23.8%. Still much higher than 15%.
Well, I have seen in my economic class that for some people with certain levels of income, they can actually earn less after tax income because of the tax rate increase associated with higher income. I forgot exactly at what income level that happens but I would use easy fictional number as an example. For example at that income level, if people who earn 35,000 dollars before tax will earn 28,000 dollars after income tax, then increasing his earning before tax to let's say 35,500 dollars, then they would actually earn 27,800 dollars after income tax. That is crazy and discourages people to earn more. I think those progressive tax needs to be revised to that crazy problem would not happen.
