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Net long term capital gains are taxed exactly as are qualified dividends since TIPRA effective 2008 and made permanent by ATRA effective 2013 but it also added the 3.8% surtax for higher AGIs. But their rationale's are different.

The 0%/15%/23.8% rate on capital gains incentivizes holding investments for at least a year while the rationale for qualified dividends is to avoid double taxation on corporate earnings used to pay the dividend. If capital gains are taxed as ordinary income at some higher AGI (currently $1MM is being discussed but that could change), this would remove the incentive to hold shares of stock or derivatives, which would likely lead to increased trading for the high income group.

I personally can see no reason to raise the rate for the high AGI filers on Q.Dividends due to the double taxation rationale. But this Congress majority are not the sharpest knives in the drawer and I doubt many of them understand or care about the concept of double taxation. If the household as an AGI >$1MM, "stick-it-to-em" seems to be the mentality today.

BruceM
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