Why even bother lowering the top rate to 35%, though, as I stated here, I would rather have the top rate of corporations and individuals at the same level (as explained few times before). Let's put ourselves in the place of a top corporate earner (let say $1,000,000 year). Here is what I do, i create a subchapter C corporation (completely legal and many executive already have that kind of arrangement) that receive all my compensation. My C corporation pays me a $50,000/year salary and on top of it, pays for my life insurances, medical stuff (if the employing company does not) etc. Then the balance, the company pays me as quarterly dividends tax free, and I pay less taxes on my earnings (note, I don't even pay the whole "payroll taxes...). Whatever I don't pay out, the first $50,000 is tax free (to Sub C corporations) and then I pay the same taxes in the corporation that I would have paid at max rate on individual, except of course, that a wise guy will make sure the sub C company does not keep more than $50,000/year.
Another scheme that will become prevalent is hedge funds that do nothing but buy stock to recapture dividends (holding I believe for 16 days or so), maybe using some options to cover potential sudden risks. That convert cap gains to tax free dividends. They could of course fight this the same way they do with bonds (where the interest is accrued daily), but I doubt they will take away the cow that generate volume and service charges.
All that kind of shenanigans can be avoided if they made th dividend deductible by corporations as I have been harping on for some time.
Zeev
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