Leonard Burman on a better to tax capital income only once. Forget dividend. Tax capital gains at the full rate when those gains have not been taxed at the corporate level.

Moreover, the most compelling argument for lower capital gains tax rates on corporate stocks is as an offset to double taxation.4 If double taxation were eliminated, as under the administration's proposal, there would be no good reason to retain a tax preference for capital gains. Thus, a natural alternative would be to combine relief from double taxation with full taxation of capital gains that have not been taxed at the corporate level. This note considers te effect of modifying the Administration's proposal to also eliminate the preferential tax rates on capital gains.5 In contrast to the Administration's proposal, this option would be fiscally responsible, broadly progressive, and would improve the odds that capital income is taxed once.

via Mark Kleiman via DeLong.