More Faux Demagoguery

I was talking to a couple of conservative friends last night and they assured me that taxes on dividends were going up to 40% next year (from the current 15%). One retired gentlement was convinced that this was going to devastate his life style. I didn't ask how much money he was making, but he indicated that it was less than $100K - and pretty clearly a $25,000 or so income cut would be pretty painful.

Anyway, I decided to check out the rumor. It seems that Faux Biznews, Larry Krudlow, and their ilk have been pushing this meme. The reality is, that if the Bush tax scheme expires without modification, dividends would be taxed at the rate of ordinary earned income, and income over $385,000 or so would be taxed at 39.5%. Someone with an income of $100K would not see any of this rate, and the average rate would more likely be on the the order of 17-20%.

Congress is likely to do some adjustments though - either freezing in place the current rates or putting in a new dividend rate of 20% or so. In any case, as usual, the right wing noise machine is engaged in its usual dishonest demagogery.

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