I think this is unlikely to happen in the current climate; it would be seen as a tax break for the rich. It's frustrating to me how many otherwise good ideas are off the table as they would be seen as helping the rich get richer.

Look, for instance, at the proposal to reduce the deductible limits for retirement contributions.

it does? you don't pay capital gains on reinvested dividends

You are technically correct assuming your dividends aren't of the qualified variety. In that instance you don't pay capital gains, you instead pay full-fat income taxes!

Capital gains are, however, absolutely owed on qualified dividends.

In either case (with the added assumption that we're talking about securities held in a non-tax-advantaged account), your brokerage will send you an IRS form 1099-div.

https://www.investopedia.com/ask/answers/011215/if-i-reinves...

It's not capital gains, because nothing is sold, but dividend income is taxed, whether or not it's re-invested. Form 1040, line 9.

Dividend income on "qualified dividends" is taxed at the capital gains rate.

Sure, but just because two things are taxed at the same rate doesn't make them the same.

And I would argue that, in effect, the capital gains are taxed less because the tax is not taken out each year, and instead the capital is left to compound.

"...paid dividends (including capital gain dividends and exempt-interest dividends".

https://www.irs.gov/instructions/i1099div#idm140075526633184

I think that parenthetical section is calling out capital gains distributions (something common for mutual funds) and exempt-interest dividends in particular because they are not ordinary dividends.

"Capital gain dividend" does not mean the same thing as "qualified dividend."

Emphasis on "is taxed."

Capital gains is just the name for the tax rate for investment income. Qualified dividends are short term capital gains, ordinary dividends are long term capital gains.

https://www.irs.gov/instructions/i1099div#idm140075526633184

No, to be precise a "capital gain" is a specific type of income that a dividend is not.

Short term capital gain income is taxed as ordinary income. Long term capital gain income is taxed at a favorable rate called the "long-term capital gain (tax) rate."

You have the rates for qualified and ordinary dividends backwards. Qualified dividends the ones that get taxed at the same lower rate as capital gains income (i.e., they "qualify" for preferential tax treatment).

Pretty sure DRIP is still taxed.

It surely is, just the same as a dividend not-reinvested.