Learning new deets re the President’s budget…here’s one worthy of attention, from the NYT:
In his new budget blueprint, President Obama is proposing to tax dividends of the wealthiest taxpayers as ordinary income subject to their top income-tax rate, which was the practice until the Bush administration lowered the rates. The proposal, released on Monday morning with other parts of the budget, would raise about $206 billion over 10 years.
Assuming that the Bush-era tax cuts expire at the end of the year, as required by law, dividends for the top 2 percent of income-earners would be taxed at 39.6 percent. Before 2002, the richest taxpayers paid a 35 percent tax on dividends, like on all ordinary income.
OK, it’s not going to happen with this Congress, but it’s good to see it in the budget—ending the favorable treatment of non-wage income, like divs and cap gains, is a good idea in terms of fairness (the Buffetts and Romneys of the world pay lower rates because their income derives from sources favored by the tax code), revenue, and avoiding distortionary incentives to structure your income in ways that evade taxes.
The fact that the President is putting this on the table is a good thing. The fact that few members of Congress would sit down at that table is less good, but that’s the reality. The President presented the budget we need right now, with considerable stimulus up front and deficit reduction in back.
The fact that the system is too broken to recognize that, much less implement it, is our problem.