Progressive dividend tax / by kevin murray

The United States current tax system, exempts qualified dividends from being taxed as ordinary income, and therefore allows those qualified dividends to be taxed at the tax rate for qualified dividends which maxes out at 20%, whereas the progressive income tax currently maxes out at 39.6%.  Basically, for stock dividends to qualify at this reduced tax rate for the individual, the recipient of such, need only essentially receive dividends of which the underlying stock of that dividend payer has been owned at least 60 days, and further that the dividend is from a U.S. publicly traded stock.


In point of fact, those that currently receive dividends at the reduced tax rate for owning those stocks, are taxed substantially less than those that are earning their money through wage income, which doesn't seem fair.  While it is true, that there are plenty of people that make their money from wage income along with making additional money through qualified dividends, that isn't the same thing as someone that makes exclusively or nearly exclusively all of their income from passive investments.  The fundamental issue with dividends being taxed at a reduced tax rate, is that the person that is physically laboring for their wages pays at a higher tax rate, than the person that is living off of the extra money earned that they have accumulated through their investments, such as in dividends from stock ownership.


It would seem to be the case that people that are actively working for their wages, should not have to pay a higher tax rate than someone that doesn't do anything other than to place their money into certain dividend paying stocks, yet that is the current situation in America.  While it is true, that most people are not eager to pay more than what they owe in taxes, the fact of the matter is that those that labor for their income are paying more than they really should, because essentially those that should pay more at a higher rate, are not.


It also doesn't make sense, that qualified dividends are not taxed at the progressive tax rates as in ordinary income; especially if the whole purpose of the progressive income tax is actually to have those that can afford to pay more, to pay more.  When, as is the situation today, that those that are multi-millionaires or billionaires, are able to pay taxes on their passive income at a very reasonable rate which has a ceiling placed upon it, than quite obviously, those that are superrich are going to increase their net worth, at the expense of all those that have so much less.


What is or isn't taxed, and how much that taxation is, along with how it is structured and who pays what, makes a significant difference as to how families and individuals are able to conduct their lives and to pay their bills.  The larger the income, from whatever source or sources, that a person has, the more that they will be inclined to use every avenue to reduce that taxation, because to a very large degree, it isn't so much what your gross income is, but rather, what your net income becomes.  As it stands, those receiving dividends are living large vis-a-vis those that live upon their wages, of which, this is a very meaningful reason as to why the superrich and therefore the wealth and income disparity, has grown substantially in America over the last fifteen years.