By Erik Wasson
The 2013 Obama budget proposal includes a new change to the way investment dividends are taxed.
The budget would raise $206 billion in new revenue over 10 years by treating dividend income for those making more than $250,000 a year as “ordinary” income.
Currently dividend income is taxed at the capital gains tax rate of 15 percent. The budget proposed restoring the 39.6 percent top rate for individuals.
The new tax proposal accompanies other changes, which together would total $1.5 trillion in new revenue over 10 years.
National Economic Council Director Gene Sperling said that President Obama is calling for shared sacrifice in the budget such as by requiring federal workers to contribute 1.2 percent more to retirement costs over the next three years. Because of that the wealthy need to contribute more, he said.
Sperling said that the budget does not include any revenue from complete overhauls of the individual and corporate tax reform that the president favors. The White House will provide more details on corporate reform later the month.
On individual reform, the president continues to favor the replacement of the Alternative Minimum Tax and the inclusion of the so-called “Buffet Rule,” which mandates wealthy taxpayers pay a minimum of 30 percent of their income in taxes.
That Buffett Rule and AMT change is not included in the budget totals.