U.S. has 9th Highest Personal Dividend Tax Rate in OECD
Tuesday, June 30th, 2015
Currently, the United States has one of the highest tax rates on personal dividend income in the OECD. According to new analysis by the nonpartisan Tax Foundation, at 28.6 percent, the U.S. has the 9th highest combined top marginal tax rate on personal dividends compared to other countries in the OECD.
Additionally, states often impose addition taxes on top of the federal tax rate of 23.8 percent, resulting in exceedingly high total tax rates. California has the highest combined federal and state rate at 33 percent, and is followed by Hawaii (31.6 percent), New York (31.5 percent), and Oregon (31 percent).
"The combined burden of federal, state, and local taxes on dividend income creates marginal rates that exceed dividend tax rates of most of the United States’ major trading partners," said Tax Foundation Economist Kyle Pomerleau. "Reducing this tax burden on savings and investment could lead to faster economic growth, higher wages, and better living standards for all."
The report's key findings include:
- The combined federal and state top marginal personal dividend tax rate in the United States is 28.6 percent.
- The United States’ top marginal tax rate on personal dividend income is 9th highest in the OECD and 5 percentage points higher than average of the 34 member nations.
- Taxpayers in certain states face top marginal rates far higher than the OECD average; Californian taxpayers face the 6th highest top marginal rate in the developed world at 33 percent.
- This double tax on corporate profits biases corporate behavior, leads to lower levels of saving and investment, lower wages, and slower economic growth.