This comes vie Political Calculations, the full article that can be found here.
Concering the coming tax increases in 2013....
In the best case scenario, without Congress acting to equalize these tax rates, given on what we see in the correlation of the tax rates for both dividends and capital gains, it's very likely that companies paying dividends will begin becoming more scarce in 2013.
In the worst case scenario, the imbalance between dividend and capital gains taxes will lead to significant distortions in the stock market and economy, similar to those that were created by the Taxpayer Relief Act of 1997, which caused the "Dot-Com" stock market bubble, whose inflation and deflation cycles were only ended with the passage of the 2003 tax cuts equalizing those tax rates.
As a policy recommendation, the only outcome that can avoid that kind of economic distortion is for the tax rates for dividends and for capital gains tax rate to be set equal to one another. We don't have much hope for that happening given how much Silicon Valley money backed President Obama in the election. Since they were the primary beneficiaries of the last imbalance between dividend and capital gains tax rates, they may be hoping for a repeat of their economic boom days.
Concering the coming tax increases in 2013....
In the best case scenario, without Congress acting to equalize these tax rates, given on what we see in the correlation of the tax rates for both dividends and capital gains, it's very likely that companies paying dividends will begin becoming more scarce in 2013.
In the worst case scenario, the imbalance between dividend and capital gains taxes will lead to significant distortions in the stock market and economy, similar to those that were created by the Taxpayer Relief Act of 1997, which caused the "Dot-Com" stock market bubble, whose inflation and deflation cycles were only ended with the passage of the 2003 tax cuts equalizing those tax rates.
As a policy recommendation, the only outcome that can avoid that kind of economic distortion is for the tax rates for dividends and for capital gains tax rate to be set equal to one another. We don't have much hope for that happening given how much Silicon Valley money backed President Obama in the election. Since they were the primary beneficiaries of the last imbalance between dividend and capital gains tax rates, they may be hoping for a repeat of their economic boom days.
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