I am wondering what was the motivation to decouple taxation (USA) of short-term gains/income from dividends in 2003.
Before 2003, dividends were mostly taxed as current income, at a significantly higher tax rate compared to long-term capital gains. However, in 2003, the situation flipped with both capital gains and dividends being taxed at 15%. (I guess now as of 2021, the highest bracket is 20% for capital gains and dividends).
I got this question while I was reading "Unconventional Success: A Fundamental Approach for Personal Investment", by D. F. Swensen, where the following table is taken from:
As I understand, the table assumes dividends to be qualified dividends which were introduced by Jobs and Growth Tax Relief Reconciliation Act of 2003, which is linked to a "bucket" of Bush tax cuts.
The general topic of tax cuts, in general, and Bush tax cuts, in particular, are a bit too broad—so, I want to be very specific. In my view, dividends are very similar to current income. I have a hard time justifying the taxation of dividends differently from regular income. I read the Why are dividends different from property income like rent?, and while it was interesting and insightful, I am coming more from a taxation point of view (and that question did not have a clear consensus anyway).
So, I wonder, what were (and, I guess, still are) the main motivations for "relaxed" taxation on qualified dividends? Why they are tax-differentiated from current income?