Tax cut on investment income is not as advertised, researchers find

[sabra]

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http://www.iht.com/articles/2005/07/19/business/tax.php

Tax cut on investment income is not as advertised, researchers find

Millions of investors who bought dividend-paying stocks after President George W. Bush persuaded Congress to lower the taxes on investments to 15 percent are paying a lot more - in some cases, almost 50 percent more - two new analyses show.

The cause is the alternative minimum tax, a parallel income tax that was originally aimed at the richest taxpayers but is affecting an increasing number of Americans and denying them at least part of the Bush administration's tax cuts.

Until 2003, dividends were taxed at the same rates as wages, as high as 35 percent for some taxpayers. The promise of lower tax rates on dividends and long-term capital gains prompted a surge in purchases of dividend-bearing stocks, and many companies, notably Microsoft, started paying dividends or increased their payouts.

But the alternative minimum tax can subject taxpayers making less than $382,000, roughly the threshold for the top 1 percent income class, to an effective tax rate on dividends and capital gains of 22 percent. The higher rate can affect some taxpayers making as little as $75,000.

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[mbperrin]

1. Boo-hoo! I have to pay 2/3 as much tax sittin'on my coupon-clippin'

ass as some bastard out actually bustin' their hump everyday! It's so unfair!

:crazy: