Capital Gains & Dividends Taxes
The taxation of dividends and capital gains is one of the most controversial issues in public finance. Relatively high effective tax rates on capital income, particularly that emanating from the corporate sector, have the potential to discourage investment and impede economic growth. Corporations must pay corporate income taxes on profits before they distribute dividends to shareholders, and shareholders pay an additional, individual-level tax on those amounts. Imposing two layers of taxation on corporate income can result in a total tax rate on capital income from corporations that is substantially higher than the rate on other types of income. In recent years, policymakers have become concerned about the economic damage caused by relatively high effective tax rates on capital income, and in 2003 the tax rate on capital gains and dividend income was lowered to 15 percent.
Additional questions about capital gains and dividends taxes? Contact us at (202) 464-6200.
Related Blog Entries
- Fix the Current AMT Before Creating a New One, by Nick Kasprak, January 31, 2012
- “Buffett Rule” Will Boost Top Dividend Rate to Over 62%, Highest in OECD, by Scott A. Hodge, January 27, 2012
- Income Inequality went Up 12 Percent under Clinton, Zero under Bush, by William McBride, January 20, 2012
- Overreaching: Time to Reconsider FATCA, by William McBride, December 2, 2011
- What Would Warren Buffett Pay Under 9-9-9, if He Went on a Consumer Binge?, by William McBride, October 17, 2011
- What would Warren Buffett pay under 9-9-9?, by William McBride, October 14, 2011
- Correcting Obama and Buffett: U.S. Capital Taxes Among Highest in the OECD, by Scott A. Hodge, September 20, 2011
- Warren Buffett's Call for Higher Taxes on the Rich Doesn’t Fit the Facts, by David S. Logan, August 15, 2011
- If I-1098 Passes, High-income Taxpayers in Washington State Should Realize Capital Gains in December, by Gerald Prante, October 22, 2010
- Mad Men and Taxes (No Spoilers!), by Joseph Henchman, October 18, 2010
- Would "ObamaCare" (Health Care Reform) Tax the Sale of Your Home? Probably Not., by Gerald Prante, September 24, 2010
- Older Taxpayers Earn Lion's Share of Capital Gains Income, by Scott A. Hodge, July 15, 2010
- Seniors Earn Lion's Share of Dividend Income According to New IRS Data, by Scott A. Hodge, July 14, 2010
- U.S. Would Have Highest Dividend Tax Rate, by TF Staff, June 7, 2010
- Capital Gains: Congress’s Immoral, Irrational, and Unconstitutional Tax?, by Lawrence Summers and Steven Pahuskin, June 3, 2010
- Frequently Asked Questions About the Bush Tax Cuts, by TF Staff, May 26, 2010
- Health Care Summit Will Probably Avoid Tax Talk, by William Ahern, February 25, 2010
- New Podcast: Rep. Dave Camp on Tax Reform, by Natasha Altamirano, January 13, 2010
- Georgia Governor Vetoes Business and Individual Tax Breaks, by Mark Robyn, May 13, 2009
- New Podcast: Congressman Tom Price (R-GA) - Obama Budget vs. GOP Alternative, by Matt Moon, April 8, 2009
- New Podcast: David Harsanyi of the Denver Post - The Politics of Taxes and Fiscal Policy in Colorado, by Matt Moon, March 18, 2009
- Tax Foundation Research Plastered in Editorial Sections This Week, by Matt Moon, March 12, 2009
- New Podcast: Congressman Paul Ryan (R-WI) - Tax, Monetary and Entitlement Policy Reform, by Matt Moon, March 4, 2009
- In the News: Tax Strategies, Tax Fraud, Tax Relief and Carbon Tax, by Matt Moon, December 3, 2008
- People Scramble in Advance of Expected Tax Hikes, by William Ahern, November 5, 2008
- Did 1997 Capital Gains Tax Exclusion for Housing Contribute to Economic Crisis?, by Joseph Henchman, September 25, 2008
- Tax Plan Floated as Bailout Alternative, by Joseph Henchman, September 24, 2008
- Questions About the Obama Tax Plan, by Robert Carroll, August 14, 2008
- What Capital Gains Tax Rate Does Obama Favor?, by Gerald Prante, August 11, 2008
- Would Obama's Tax Plan Cost Jobs?, by Gerald Prante, August 7, 2008
- Capital Gains Tax Continues to Roil Economic Debate on Anniversary of Bush Tax Cut, by William Ahern, May 27, 2008
- Presidential Campaigns to Address Major Domestic Policy Issues, by TF Staff, April 28, 2008
- Obama and Gibson Capital Gains Tax Exchange, by Gerald Prante, April 17, 2008
- Capital Gains Taxes and Inflation, by Curtis S. Dubay, July 31, 2007
- New Tax Foundation Primer on Investment Income Taxation, by Alicia Hansen, July 17, 2007
- Tax Court Rules Lottery Winnings Are Not Capital Gains, by Alicia Hansen, November 14, 2006
- Growing AMT Wiping Out Capital Gains and Dividend Tax Reductions, by Andrew Chamberlain, July 24, 2006
- Feldstein: Taxes on Investment Income Are High and Distortionary, by Andrew Chamberlain, June 21, 2006
- China Leads the Way to Lower Capital Gains Taxes, by Andrew Chamberlain, December 14, 2005
