The Obama Wrecking Ball
Barack Obama's new budget has hidden in it a proposal to triple the dividend rate to 44.8%, nearly triple the current rate. This is on top of the corporate tax rate of 35%, which is the highest in the industrialized world.
This will cause an exodus of investment, effectively drying up much of what it takes for corporations remain solvent. It will most certainly cause downsizing, and an even greater amount of outsourcing to countries like China and India.
Obama's wrecking ball continues to wreak havoc on business and the economy.
A plan to triple the tax rate would hurt all shareholders.
President Obama's 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.
Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.
Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.
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