The Obama budget also calls for the top tax rate for qualified dividends would be taxed at individual income tax rates of up to 43.4 percent for taxpayers earning more than $200,000 per year under President Obama's budget proposal for fiscal year 2013 released Feb. 13.

The Obama administration has previously supported tying the dividends tax rate to capital gains, which the administration still believes should be taxed at a top rate of 20 percent.
A senior Treasury Department official said the budget called for “tough choices” and said dividends have traditionally been taxed at ordinary income tax rates, so the proposal would simply return policy to where it had been for most of the 20th century.

The Obama budget also calls for capping income tax deductions for individuals at the value of the 28 percent tax rate. The official said there would be no exceptions, including deductions to charitable organizations.

Treasury said the budget proposal does not offer a detailed look at either corporate or individual income tax reform ideas, but the president believes any of the proposed changes would be an improvement to current policy. An eagerly awaited framework for corporate tax reform is expected to be released by Treasury “around the end of the month,” the senior official said.