Taxing barbarians

The LAT reports today on Congressional proposals to tax private equity firms and other investment partnerships at ordinary income rates (presently up to 35 percent) instead of the lower 15 percent rate that applies to long term capital gains and dividend income. Generally, the reporter favors the proposals but offers some opposing views, a mild effort at balance. But no where is it mentioned that a tax on dividends is a second tax on income that already has been taxed at 35 percent to the corporation that paid the dividend. Nor is it mentioned that capital gains are not indexed for inflation, and therefore that capital gains that are attributable to inflation are not really gains at all but are nevertheless taxed at 15 percent. Finally, the reporter doesn't mention that high bracket taxpayers are subject to phase-out of their personal exemptions and itemized deductions, their miscellaneous deductions are limited by the 2 percent rule and the state income tax they pay often is not deductible because of the alternative minimum tax.