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The dividend tax is the tax on corporate dividends.

United States

President George W. Bush proposed in 2003 to eliminate the U.S. dividend tax. The main argument for its elimination was that it amounts to a "double taxation"—once as corporate profits and secondly as personal income. Critics argued that eliminating it would have little effect for the bottom 60% of wage-earners, and greatly reduce taxes for the upper 20%. Supporters pointed out that the bottom 60% of wage-earners already pay little in taxes but are probably harmed the most by the double taxation. When corporations decide how to raise their capital, they see that the interest payments on debt are taxed only once while the dividend payments on equity are taxed twice, thus the tax system favors going into debt and becoming highly leveraged. Hihghly leveraged companies must more workers more quickly in anticipation of economic downturns. The double tax on dividends thus deepens the depth of the recessions of the business cycle. It is the bottom 60% of wage earners arguably suffer more than the "rich". Given the negative impact of leverage on the business cycle, from a macro-economic perspective it would be wiser to double tax interest rather than dividends.

After months of wrangling, the U.S. Congress passed the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) that included some of the cuts President Bush requested. He signed the bill on May 28, 2003. Under the JGTRRA, dividends are taxed at a 15% rate for most individual taxpayers. Dividends received by low income individuals are taxed at a 5% rate until December 31, 2007, and are untaxed in 2008. On January 1, 2009, standard income tax rates will again apply to dividend income for all individuals.

Finland

In Finland, a double taxation will be in use of 2005. Income tax is 29% for a stockowner and the total tax will be around 50%.

Netherlands

In the Netherlands there is a tax of 1.2 % per year on the value of the share, regardless of the dividend, as part of the flat tax on savings and investments.

• Tax