A plan to raise the dividend tax rate to 20% for households earning more than $250,000 will have negative consequences for the middle class, according to a new study from Ernst & Young.
The study finds that filed 68% of all tax returns with dividend income in 2009 (the latest year for which data is available) were filed by consumers earning less than $100,000 per year.
According to the report, the Senate Democrats' plan to shift the tax burden onto upper-income wage earners will likely cause them to shift their investments—here and abroad—to those that are taxed at lower rates. This in turn will likely cause dividend-paying companies to reduce the size of their quarterly dividend checks.
