Why Not to Eliminate Taxation of Dividends

Jan 7, 2003

Authors: Greg Anrig, Bernard Wasow

Publisher(s): The Century Foundation

Dividend income is highly skewed toward the top of the income distribution. Households with incomes above $200,000 per year (a scant two percent of the total) would enjoy 53 percent of the tax cut from eliminating dividend income from the tax base. Moreover, 84 percent of households with incomes below $50,000 a year and 59 percent of household earnings between $50,000 and $100,000 would receive no tax break at all because they don’t collect a dime in dividends. The total cost to the government would be substantial -- $42 billion in 2003 dollars – significantly adding to future budget deficits.