Re:How America's Top 20 Percent Perpetuates Inequality
by prostoalex on Friday June 02, 2017 @12:19AM
(#14467440)
A very small segment of the rich who rely on dividend payments for cashflow and are not financially savvy enough to hold dividend-producing stocks in a trust or tax-shielded accounts.
Special provision for higher tax on dividend income after a certain threshold (a) complicates the tax code (b) increases the cost of tax preparation, therefore removing disposable income that would be spent elsewhere from those sectors of the economy and (c) encourages companies to favor stock buybacks over dividend payments, which introduces its own distortions into the economy.
And oh, by the way, it's completely avoidable if you suspect your income will exceed $200k and are willing to spend 10 minutes to rebalance your taxable accounts in favor of growth stocks, real estate and municipal bonds.
Other than that it's an excellent provision in the tax code.
The AHCA had a provision to eliminate a 2% additional tax on dividend income (IIRC) for people earning over $200k. Removing that is, as far as I can tell, only a benefit to "the rich" (by some definition, maybe not yours).