The government wants citizens to be long-term investors, which is why the capital gains tax is lower than ordinary income tax rates. Dividend income was historically taxed at ordinary income rates, but wen the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) was passed, common stock dividends received the same tax rate as long-term capital gains, which is a lower tax rate than ordinary income. As a result, many companies raised or instituted dividends to make their stock more marketable to investors.
Investment dictionary. Academic. 2012.
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ordinary income — n: income that does not derive from the exchange or sale of capital assets or property used in one s trade or business and that for individuals includes compensation, interest, dividends, and short term capital gains Merriam Webster’s Dictionary… … Law dictionary
Ordinary income — Part of a series on Taxation Taxation in the United States … Wikipedia
ordinary income — Income from regularly recurring sources, such as earnings from work, interest, and dividends, as distinguished from a bonanza, winnings tin a horse race, the prize won in a contest, or a capital gain realized on a sale of property. Sloane v… … Ballentine's law dictionary
ordinary income — taxable income, as salary and wages, other than capital gains. * * * … Universalium
ordinary income — The income derived from the regular operating activities of a firm or individual. Bloomberg Financial Dictionary … Financial and business terms
ordinary income — taxable income, as salary and wages, other than capital gains … Useful english dictionary
ordinary — or·di·nary adj: of a kind to be expected from the average person or in the normal course of events; broadly: of a common kind or degree an ordinary proceeding compare extraordinary Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 … Law dictionary
income — in·come n: a gain or recurrent benefit usu. measured in money that derives from capital or labor; also: the amount of such gain received in a period of time an income of $20,000 a year Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 … Law dictionary
Income tax in the United States — UStaxationThe federal government of the United States imposes a progressive tax on the taxable income of individuals, partnerships, companies, corporations, trusts, decedents estates, and certain bankruptcy estates. Some state and municipal… … Wikipedia
ordinary — 1. noun At common law, one who had exempt and immediate jurisdiction in causes ecclesiastical. Also a bishop; and an archbishop is the ordinary of the whole province, to visit and receive appeals from inferior jurisdictions. Also a commissary or… … Black's law dictionary