Dividend tax is an income tax paid on a company's profits that are distributed to its shareholders. Dividend payments are treated as ordinary income and are taxed as if the taxpayer had earned income through active employment. There is currently a lot of controversy surrounding the tax. The government taxes dividends twice: first it taxes corporate income, then it taxes the same income again when shareholders receive dividends paid from corporate income. Which is “double taxation” (http://pages.stern.nyu.edu/~byeung/dividend%20taxation.pdf). Double taxation raises the question of whether the tax should be eliminated and which taxes should be cut. On both sides..., the dividend tax... because...,The dividend tax was introduced in 1936 by President Roosevelt in the New Deal (Levey). The Economic Growth and Tax Relief Reconciliation Act of 2001 introduced lower dividend tax rates (NATP 2001). On May 23, 2003, President Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003, which gained momentum to pass tax changes and was set to expire in 2008 (NATP 2003). Then, on May 17, 2006, the reduced rates were extended for another two years by the Tax Increase Prevention and Reconciliation Act, until 2010 (NATP 2005). There are two ways used for the purpose of calculating dividend tax and they are known as qualified dividends and non-qualified dividends. Qualified dividends are shares held for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. These dividends are taxed at 5% if the investor is below the 25% personal income tax bracket and 15% for investors above it. Non-qualified dividends are dividends that do not meet the criteria... middle of paper... sis. The Heritage Foundation, 7 January 2003. Web. 04 March 2010. .NATP. Economic Growth and Tax Relief Reconciliation Act of 2001. Digital image. NATPtax.com. NATP, July 11, 2001. Web. February 16, 2010. .NATP. Tax Relief for Jobs and Growth Reconciliation Act of 2003. Digital image. NATPtax.com. NATP. Network. February 16, 2010. .NATP. Tax Hike Prevention and Reconciliation Act of 2005. Digital image. NATPtax.com. NATP. Network. February 16, 2010. .Wharton. “A Simple Solution to Stock Market Problems: Eliminate the Corporate Dividend Tax.” A simple solution to the stock market's problems: eliminate the corporate dividend tax. Knowledge@Wharton, Aug. 14, 2002. Web. Feb. 15. 2010. .