I recently received a statement for a stock I own in a DRIP account. Not a big account, I think, but I suppose that is relative. Anyway, an enclosure with the statement urged me to contact my Members of Congress to ask them to extend the current low tax rate on qualified dividends .

If the tax break is not extended, dividends will be taxed at the same rate as ordinary income. Ordinary income is the type of income you make at your job. Well, I won’t be calling Congress to extend this tax break. In fact, I may do the opposite and call or email to oppose the extension.

It seems to me that if any income is to be treated differently, there should be a good reason.

The only good argument I have heard in favor of this break is that the money was taxed once at the corporate level and then again at the individual level. But then this tax break is given at the individual level whether or not the corporation paid tax. And there are quite a few companies that make a good profit but pay little or no tax.

Of course, it would be a logistical nightmare to try to match dividend taxation to the taxes companies pay. But if this issue is of concern we should either find a way to do it or adjust the corporate rate in some way. Ideally it seems that either the corporate rate should be zero or the rate on dividends should be zero if the corporation paid tax on all profits.

But I don’t understand why this is a problem. By the same logic when I pay taxes and then hire a contractor to paint my house, shouldn’t his tax rate be reduced as I have already paid tax on the money.