The issue isn’t the tax rates, it’s how you calculate “taxable income”. Dividends are taxed at a lower rate, becasue the corporation has already been taxed on their profits before the dividends are distributed. There is still double-taxation on corporate profits once they are distributed to the shareholders, but taxing dividends at the same rate as other income would be an obscene tax rate. This debate is all smoke and mirrors and there is nobody on the Republican side who is doing much to explain the issues to the public in simple terms.
1. Capital gains tax rate is the same as the regular income tax rate for the recipient.
2. The capital gains cost basis in adjusted based on the ratio of the CPI on the sale date and the purchase date.
3. All dividends received are taxed at the same rate as regular income.
4. All dividends paid are counted as legitimate business expenses and are thus tax deductible for companies.
This way dividends are taxed once and only once rather than the multiple taxation we have now, with adjustments in rates for some investments but not others based on how the company is organized. Also, you pay taxes on capital gains, but not on the nominal gain that comes from inflation. Buy stock for $1000 and sell it for $3000, but if inflation would have made that $1000 worth $1800 later you would then pay tax only on the $1200 in real gain, not the $2000 of "gain". You also get rid of all the rules about short and long term capital gains, like it is somehow morally suspect to sell a stock at 364 days, but OK at 365 days.