

2013 Budget Proposal will triple dividend tax to 44.8% - viggity
http://online.wsj.com/article/SB10001424052970204880404577225493025537660.html?mod=WSJ_hp_LEFTTopStories

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viggity
I can't even believe this. What am I missing HN? Isn't this going to be a
major damper on the economy?

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calbear81
I don't really think so, dividends are more like interest than capital gains,
so why shouldn't they be taxed at the normal income? Even if you're
aggressively buying high-dividend yield blue chips (6% APR+), with the higher
tax rate you're still doing much better than you would with a CD or other type
of savings/money market account.

I've been wondering what the effect would be if we restructured the short and
long term capital gains period instead. I think the 1 year holding period is
just too short in the perspective of economic cycles to provide the market
with stability. What if we gave much more incentives for people to hold onto
their stocks longer (more long term investment, less speculative):

Currently, the capital gains rate drops to 15% or so if it's a long-term gain.
Short term gains are taxed at normal income rate.

What about?

Tax rate for holding period:

6 Months or Less - 50% 6 Months to 1 year - 40% 1 year - 30% 2 years - 20% 3
years - 10% 4 years+ - 5%

You could make the argument that a Roth IRA could accomplish something similar
but there's a limit to the contributions. I know if this was the structure, I
would convert more of my assets to stocks.

