Hacker News Mobile - 2013 Budget Proposal will triple dividend tax to 44.8%

[-] calbear81 85 days ago link

I don't really think so, dividends are more like interest than capital gains, so why shouldn't they be taxed at the normal income? Even if you're aggressively buying high-dividend yield blue chips (6% APR+), with the higher tax rate you're still doing much better than you would with a CD or other type of savings/money market account.

I've been wondering what the effect would be if we restructured the short and long term capital gains period instead. I think the 1 year holding period is just too short in the perspective of economic cycles to provide the market with stability. What if we gave much more incentives for people to hold onto their stocks longer (more long term investment, less speculative):

Currently, the capital gains rate drops to 15% or so if it's a long-term gain. Short term gains are taxed at normal income rate.

What about?

Tax rate for holding period:

6 Months or Less - 50% 6 Months to 1 year - 40% 1 year - 30% 2 years - 20% 3 years - 10% 4 years+ - 5%

You could make the argument that a Roth IRA could accomplish something similar but there's a limit to the contributions. I know if this was the structure, I would convert more of my assets to stocks.