As discussed yesterday, the most important number in President Obama’s budget is that the burden of government spending will be at least $2 trillion higher in 10 years if his is enacted.
But there are also some very unsightly warts in the revenue portion of the president’s budget. Americans for Tax Reform has a good summary of the various tax hikes, most of which are based on punitive, class-warfare ideology.
In this post, I want to focus on the president’s proposals to increase both the capital gains tax rate and the tax rate on dividends.
Most of the discussion is focusing on the big increase in tax rates for 2013, particularly when you include the 3.8 percent tax on investment income that was part of Obamacare. If the president is successful, the tax on capital gains will climb from 15 percent this year to 23.8 percent next year, and the tax on dividends will skyrocket from 15 percent to 43.4 percent.
But these numbers understate the true burden because they don’t include the impact of double taxation, which exists when the government cycles some income through the tax code more than one time. As this chart illustrates, this means a much higher tax burden on income that is saved and invested.
The accounting firm of Ernst and Young just produced a report looking at actual tax rates on capital gains and dividends, once other layers of tax are included. The results are very sobering. The United States already has one of the most punitive tax regimes for saving and investment.
Finish it here: http://www.forbes.com/sites/danielmi…capital-gains/
Hava-gafa-kasha is not only a tax avoider, but a denier of the obvious.