One of the ways in which President Obama plans to whittle down the federal deficit is to raise taxes on U.S. taxpayers with incomes above $200,000 per year. Allowing the tax cuts passed during the administration of George W. Bush to expire at the end of the year for those above this income threshold would result in substantially higher rates paid on dividend income, currently taxed at 15%, same as long-term capital gains, for wealthier tax payers. Dividends would be taxed as ordinary income, at rates as high as 39.6% for individuals and couples earning more than $388,350.
|