The Hill News

There has been a vigorous political discussion on tax rates for capital gains and dividends in recent weeks. It is time to take a step back and review how investment income is really taxed and how it impacts taxpayers, the American economy and our ability to compete internationally.
 
Capital gains and dividend tax rates paid by individuals represent only a portion of the overall level of taxation applied to corporate earnings. A new study prepared by Ernst & Young illustrates the many layers of taxation â€" at federal, state and local levels â€" that are applied to the same dollars earned by individual investors. When you factor in these layers of taxation, you discover that taxpayers face an integrated tax! rate on investment income of 50.8 percent. This level of taxation places America at a competitive disadvantage to most other developed nations fighting to attract precious investment dollars.

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