[justlurking]

I would have no problem with taxing dividend income as ordinary income, with one provision: The corporation can expense dividend distributions, so the dividends aren't doubly taxed by corporate income taxes.

I'd be willing to accept taxing long-term capital gains as ordinary income, too -- as long as the cost basis is indexed by the CPI.

Example: you buy a stock for $100/share in 2007. In the past 5 years, the CPI has increased 15% (not exactly, but I'm using that as an easy example). So, when you sell the stock in 2012, the cost basis is $115/share, instead of $100/share.

If you sell the stock in 2012 for $120, you only pay capital gains/income taxes on $5/share, not the $20/share that is primarily due to inflation.

[Rennes Templar]

“I would have no problem with taxing dividend income as ordinary income, with one provision: The corporation can expense dividend distributions, so the dividends aren’t doubly taxed by corporate income taxes.’

Are dividend distributions taxed now?