Tax Capital Gains and Dividends at the Same Rates as Ordinary Income

The maximum tax rate for capital gains and dividends is currently 15%, much less than the maximum tax rates for many working Americans. Taxing capital gains and dividends at the same rates as ordinary income will not affect most Americans, as retirement accounts such as IRAs and 401(k)s are not taxed based on capital gains or dividends, but rather are already taxed as ordinary income. Changing the tax rate on capital gains and dividends will level the playing field for all Americans, ensuring that hedge fund managers will no longer pay taxes at a rate far lower than working Americans. This alone will not be enough to balance the Federal budget, but it is a first step towards a more fair and equitable tax system.