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URL:  http://boards.fool.com/ltltfurthermore-if-i-collect-1000-in-26870626.aspx

Subject:  Re: Is your 401(k) Inadequate For Retirement Date:  8/3/2008  1:20 PM
Author:  SeattlePioneer Number:  13783 of 19222

<<Furthermore, if I collect $1000 in dividends and $1000 in interest why shouldn't I pay the same rate of tax on both kinds of income? I realize that there is a double-taxation problem on dividends, but that should be fixed in the corporate tax code. For an individual, the income looks the same.
>>


You answered your own question, of course. The discount on dividend income offsets the income taxes already paid by corporations for the privilege of paying out the dividend.

As to why that was handled the way it was, as I understand it it's because politicians wanted to have their constituents know they were getting a discount on dividend income they received, which wouldn't have been as apparent had it been handled upstream.



Seattle Pioneer
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