U.S. has the 9th Highest Personal Dividend Tax Rate in the OECD

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U.S. States have five of the top ten highest rates in the OECD

Washington, D.C., March 5, 2014— Currently, the United States has one of the highest tax burdens on personal dividend income in the OECD. According to new analysis by the nonpartisan Tax Foundation, at 28.6%, the U.S. has the 9th highest top marginal tax rate on personal dividends compared to other countries in the OECD. Additionally, California has the 6th highest rate in the industrialized world, and is followed by Hawaii (7th), New York (8th), Oregon (9th), and Minnesota (10th).

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 OECD 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.

"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."

Full study: The United States’ High Tax Burden on Personal Dividend Income

Media Contact:

Richard Borean

Manager of Communications

Tax Foundation

202-464-5120
borean@taxfoundation.org

The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.

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