Dividend Tax

In many parts of the world, dividends are counted as regular income and are taxed as such.

The dividend tax is subjected to much debate because dividend income suffers from double taxation and many consider it to be unfair. What happens is that companies pay dividends using net income, which are profits after corporate tax have been paid. So double taxation occurs when the dividend is again subjected to income tax when it is received by the shareholder.

Those supporting dividend tax however argue that the wealthy are the ones who own assets and they live off passive income such as dividends and therefore dividends need to be taxed to lessen the tax burden on the working class. This argument does hold considerable weight when you consider that the richest 10% of adults on the planet owned 85% of the world total of global assets, according to a 2006 UN report of wealth distribution.

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