Obama’s Insane Dividend Tax Hits the 51% & “Millionaires” Who Make $200,000

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“…nothing compared to the lost $400 billion annually in interest income on savings” (assumes 5% one-year T-bill rate to reflect true cost of living increases) ~ Hedge Fund Manager

 

This dividend tax proposed by Obama is an investment-killing, pension-robbing, atypical government tax for a capitalist system. It is far more suitable for a Soviet-style government.

Obama makes the usual false assertions that only “millionaires” who make $200,000 a year (Obama math) will be hurt. In reality, shareholders of all incomes will suffer, particularly retirees who rely on this money for their pension. It also seeks to tax corporations that provide these dividends at a rate of 64.1% (they will be taxed before you get a dime). This is not capitalism. It is the government assuming control over the corporations through taxation.

If you had a plan to destroy the country’s economic system, wouldn’t this be part of it?

We already know from history how this will work. In the ’90’s, the dividend tax rate was roughly twice the rate of capital gains and dividend as an income lost favor. In 2003, when the rate fell to 15%, dividend incoome rose from $103 billion to $337 billion in 2006 (WSJ).

Obama’s plan will quickly rob everyone of this investment income and since the taxes will make stocks less valuable, prices will fall, and the inevitable sell-off will negatively impact all mutual funds. 51% of adults hold stock directly or through mutual funds.

…Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today’s 15% rate.

Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%…

…Who would get hurt? IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.

But all American shareholders would lose… Read more: WSJ

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