The proposal, in the president’s fiscal 2013 budget released today, would reverse his previous policy that called for taxing dividends more lightly than wage income. The plan would treat dividends as ordinary income for married couples making more than $250,000 a year and individuals making more than $200,000. The dividend tax proposal would raise $206.4 billion over 10 years.
“We simply can’t afford to devote $206 billion for lower tax rates for the highest-income Americans,” Gene Sperling, White House director of the National Economic Council, told reporters today. “Our system for taxing investment income for the most well-off Americans is clearly broken.”
Obama is proposing a top individual income tax rate of 39.6 percent in 2013, up from 35 percent. His budget would tax capital gains at a top rate of 20 percent, up from 15 percent. The top dividend tax rate is now 15 percent.
An additional 3.8 percent tax on the unearned income of couples earning $250,000 and individuals making at least $200,000 will take effect in 2013 as part of the 2010 health- care law. As a result, some taxpayers would pay 43.4 percent in federal taxes on their dividends next year, almost triple what they now pay.
Yeah, the super-rich paying 15% and getting away with it like Mitt Romney? That would come to an end, except as Jon Bernstein reminds us, Republicans would rather raise the deficit than ever, ever, ever make anybody earning more than $250,000 a year pay a dime more in taxes.
Sure, Republicans talk tough about balanced budgets. But when it comes to real budget deficits — you know, federal spending vs. federal revenues — Republicans lose interest real fast. Under closer scrutiny, their plans dissolve into gimmicks and magic asterisks. When Obama and Speaker John Boehner started serious negotiations into larger deficit reductions last year, the House GOP conference revolted. Their big structural reforms, from “CutGo” to the line item veto to their “balanced” budget amendment, virtually always turn out to be perhaps effective tools for keeping taxes low for rich folks, but do nothing at all for getting spending and revenues to match. And now, the same thing has happened on the payroll tax cut. Republicans simply don’t rank fiscal balance very high in their list of priorities. They’re always willing to cut spending on those things they don’t want to spend money on anyway, but if it comes to compromising, what gives way is their supposed commitment to budget discipline.
In the end, Grover Norquist and his Club For Growth goons are the biggest threat to our economy, period. Because of them, we can never raise taxes on the rich. Ever. And because we can never raise taxes, the only alternative is massive, brutal Greek-style austerity, which is what every single GOP candidate for President is promising.
Zandardad and the Mustache Of Freedom are right: screw a third party, America needs a responsible second party.