Center for Federal Tax Policy

Individual Capital Gains and Dividends Taxes

The taxation of dividends and capital gains is one of the most controversial issues in public finance. Relatively high effective tax rates on capital income, particularly that emanating from the corporate sector, have the potential to discourage investment and impede economic growth. Corporations must pay corporate income taxes on profits before they distribute dividends to shareholders, and shareholders pay an additional, individual-level tax on those amounts. Imposing two layers of taxation on corporate income can result in a total tax rate on capital income from corporations that is substantially higher than the rate on other types of income. In recent years, policymakers have become concerned about the economic damage caused by relatively high effective tax rates on capital income, and in 2003 the tax rate on capital gains and dividend income was lowered to 15 percent.


Related Articles

Tax Policy in the First 100 Days of the Biden Administration

April 30, 2021

Joe Biden’s 61 Percent Tax on Wealth

April 29, 2021

Federal Individual Income Tax: Exemptions and Treatment of Dividends (1913-2021)

April 27, 2021

Federal Capital Gains Tax Collections, Historical Data (1954-2018)

April 26, 2021

Top Combined Capital Gains Tax Rates Would Average 48 Percent Under Biden’s Tax Plan

April 23, 2021

Options for Reforming America’s Tax Code 2.0

April 19, 2021

Changes to the Tax Base Matter When Evaluating the Impact of Tax Reforms

February 23, 2021

The Drawbacks of State Taxes on Financial Transactions

January 11, 2021

A Preliminary Look at 2019 Tax Data for Individuals

October 29, 2020

2021 Tax Brackets

October 27, 2020

Tracking the 2020 Presidential Tax Plans

October 21, 2020

How Should Wealth and Work Be Treated in the Tax Code?

September 21, 2020

Reviewing Joe Biden’s Tax Vision

August 20, 2020

Where Does Kamala Harris Stand on Tax Policy?

August 12, 2020

Analysis of Capital Gains Tax Proposals Among Democratic Presidential Candidates

March 18, 2020

Analysis of the Economic, Revenue, and Distributional Effects of Repealing Step-up in Basis

February 24, 2020

Recent Study on Financial Transaction Taxes Understates their Economic Harm

February 20, 2020

Bloomberg’s Financial Transaction Tax (FTT) Proposal Revives Bad Policy

February 20, 2020

Overview of Democratic Presidential Candidate Michael Bloomberg’s Tax Plan

February 7, 2020

The Impact of a Financial Transaction Tax

January 23, 2020