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1 Gerald Prante, The Importance of Dividend Income for Low-Income Seniors 1 (2006)

handle is hein.taxfoundation/fffaxz0001 and id is 1 raw text is: r:OuU NDAT10N. February 8, 2006 The Importance of Dividend Income for Low-Income Seniors by Gerald Prante Most debate over whether to extend the reduced rates on dividends and capital gains has focused on the tax benefits of these cuts to high-income taxpayers. What has been largely ignored is the impact these tax policies have had on corporations' decisions on how best to distribute their income to shareholders-including senior citizens, who rely most on the stable flow of income that dividends provide. A recent Tax Foundation analysis illustrated that a large number of those benefiting from dividends are seniors and those on the verge of retirement (See wvv.taxfoundation.orgipublicationsishowi1236.html). A further analysis of these seniors earning dividends reveals that lower-income seniors who file tax returns depend more heavily on dividend income than high-income seniors. Table 1 details the distribution of capital gains and dividends among taxpayers over age 65.1 Table 1. Importance of Dividends and Capital Gains for Seniors 65 and over, by Income Senior Taxpayers Age 65 and over Who Claim Some Dividend Income Percentage of Income Percentage of Income :Income from Dividends from Capital Gains $0 - $29,999 11.30,'0 0.6 $30,000 - $49,999 13.80 4.2% $50,000 - $99,999 7.200 8.30 $100,00and over 7.70% 16.6%o .. . . . . . . . . . . . .............................................................................................. 7. 7 . ....................................................................................... Note. Income is Total Income from all sources as defined by the 2001 Federal Reserve Survey of Consumer Finances. A senior is classified as a taxpayer if his or her adjusted gross income (AGI) is greater than $0. Source: Federal Reserve Board Survey of Consumer Finances (2001), Tax Foundation calculations.