More on the siren song, "The Buffett Rule"...

When The Motley Monk last posted about President Obama's so-called "justice" tax increase, the "Buffett Rule," The Motley Monk noted the negative effects that rule would have on the nation's capital markets.  In response to the increase in taxes on income from dividends, the United States will become a much less attractive recipient for capital investment and the economy will suffer.

The President of the Tax Foundation, Scott A. Hodge, has cast all of this in an international context, examining tax rates among the nations belonging to the Organization for Economic Cooperation and Development (OECD).

In the U.S., dividend yields are taxed, first, as corporate profits (35%), second, as dividend income subject to federal taxation (15%), and third, as dividend income subject to state taxation (variable rates).  The current U.S. dividend income taxation rate is 52.1%, placing the United States fourth out of all OECD nations, trailing France, Denmark, and the United Kingdom.

The Buffett Rule would increase the individual dividend income rate paid by millionaires from 15% to 30%, raising the highest dividend income tax rate to 62.1%.  With the OECD average at 41.1%, the United States would have the highest rate among all OECD nations.

Why is this important?

Hodge argues that given the mobility and flexibility between markets, capital would move to friendlier climates.  In turn, this will negatively the U.S. economy because the nation will not be able to compete effectively with other developed nations.


Let the discussion begin...




To read Scott Hodge's blog, click on the following link:
http://www.taxfoundation.org/blog/show/27934.html