The current 15% tax cap on dividend income is set to expire on December 31st of this year, and the folks over at DefendMyDividend.org want you to believe that if you are receiving income in the form of dividends, your financial future could be at stake! But, in fact, the current proposed budget increases the tax rate for dividend income only for households with incomes of over $250,000. So, if you're making less than a quarter of a million dollars a year, the proposed dividend income tax hike will have no effect on your finances.
DefendMyDividend seems to be targeting retirees: "Seniors and people reaching retirement age, in particular, represent a large portion of investors who own dividend-paying stocks. In fact, many seniors rely on dividends as a way to supplement their retirement income." But, as Citizens for Tax Justice, a 501 (c)(4) public interest research and advocacy organization devoted to fair taxation, points out, "Only seniors who are among the richest two percent of taxpayers would lose any of their dividend tax cuts under proposals being discussed. Arguments that corporations would reduce dividend payments in response are not credible because two-thirds of dividends are paid to tax-exempt entities." Contrary to what DefendMyDividend suggests, 98% of senior citizens would not actually see any increase in taxes. Furthermore, CTJ points out, "only one in four seniors receives even a dollar in taxable dividends."
So even if you happen to be one of the 1 out of 4 senior citizens that does receive dividends, you have to be making over $250,000 a year to be facing a tax increase on your dividends.
Another interesting tidbit about dividend income: using the Gini coefficient, a measure of economic inequality, economist Jared Bernstein analyzed data from 1996 to 2006 and discovered that the largest contributor to the income disparity in America is due to, you guessed it!, dividend and capital gains income. Bernstein's proposal to curb inequality is quite simple: "Tax capital gains and dividends as regular income."
You can check out Jared Bernstein's research on this issue here: http://jaredbernsteinblog.com/....
And here's another not so little historical tidbit. Up until the 90s, the size of dividends was twice what they are now, and large corporations are more profitable than ever. So where's the profit going, one might ask? Right, into the pockets of CEOs and top management, resulting in an on-going heist from those shareholders who technically "own" these companies. What's a person to do?
For starters, you should order a copy of Heist to deepen your understanding of political economy, and then set up a screening in your community or living room.