Senate Democrats Split From Obama on Taxing Dividends

[eallen]

17. Seems more like unearned income to me.

Work is hard. I know when I've worked for money, and when all I had to do was let other people work for it.

I much prefer the unearned variety.

Sort of hard, though, to justify taxing that at a lower rate. The problem is that we want to encourage companies to pay dividends. Or to put it another way, we don't want dividends too much penalized vis-a-vis capital gains. The current set-up has the company pay taxes on the money earned before it is dispersed as dividend, then gives the dividend favored rates on the shareholder's income. It might make more sense to treat the dividend as straight earned income to the shareholder, but not require the corporation to pay tax on earnings it disburses as dividends.