I think this is true

Not sure. A brief reading of the Biden tax plan suggests – suggests – that dividends should be taxed like other income.

So, 28% corporate income tax, then 39.4% individual income tax. That is, remove the 15% dividend tax rate.

So, taxing dividends twice is going to be the same rate as once, is it?

2 thoughts on “I think this is true”

  1. Big if true. This would make a huge difference between normal companies (C Corporation) and small ones (S Corporation). The owners of any S Corp who were thinking of upgrading to C Corp status will be having second thoughts now. Long term this will discourage small companies from growing. A real hammer blow to the ideal of American entrepreneurship.

  2. I rather doubt that they will but with a modification, the idea is entirely sensible. Add Tax imputation, that is the tax paid by the company is given to the shareholders as part of the dividend, and reduces the individuals tax by that amount. So if the corporate rate is 28% and the top tax rate is 39.7, then top bracket individuals would pay an extra 11.7% on dividends as long as the company itself had paid the 28% rate.

    If however the company is playing the various tricks available and reduces its tax rate to 10% (say), then the shareholder has to stump up and extra 29.7% tax. Makes aggressive tax planning for companies pretty pointless, which can’t be a bad thing. Removes the false talking point about dividends being taxed so little and recognises that really, only people pay tax, companies just do so on behalf of their owners.

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