'Raise Taxes Significantly'
Taxing dividends as ordinary income "will raise taxes significantly," said Curtis Dubay, senior analyst at the Heritage Foundation, a Washington-based research organization that promotes conservative public policies, according to its website.
"You're going to see a significant gain in effective tax rates if that happens," Dubay said in a telephone interview.
Individual income taxes made up 45.4 percent of all federal revenue in 2008. IRS data show taxpayers claimed $271 billion in deductions for state income taxes, $463.7 billion in mortgage interest and $167.9 billion in property taxes.
New York taxpayers earning more than $200,000 a year had the highest average amount of itemized deductions at $212,553 per household; Santa Barbara ranked second at $138,796, and San Francisco was No. 3 with an average $138,611.
Three of the lowest effective rates were paid in Riverside County, California, where the typical wealthy taxpayer handed over 19.5 percent of income to the government; San Bernardino, California, at 20.2 percent; and Loudoun County, Virginia, at 20.3 percent. Loudoun County, a suburb of Washington, D.C., reported the lowest average capital gains in the nation among wealthy households, with $18,340.