The Obama budget is proposing to tax dividends for high-income taxpayers as ordinary income. This is not a change on capital gains, it’s on dividends, the money earned through corporate payouts of profits to shareholders. The capital gains tax rate would rise to 20% from 15% under the Obama proposal, consistent with prior years.

Tonight the President will deliver the State of the Union Address, at the beginning of his run for re-election. Unlike Obama’s other addresses to a joint session of Congress, I wouldn’t expect this one to produce much in the way of a legislative blueprint. It’s an election year, and most of the major issues will be determined by the outcome of that election. The President will instead try to set the agenda for the fall campaign with this speech, and the early excerpts show his focus on an economy “built to last.” Not unlike a Ford truck.

MItt Romney, who’s been pressed to release his tax returns, effectively conceded today that since most of his income in the last ten years comes from capital gains, his effective tax rate was “closer” to the 15 percent on capital gains, one of the main factors driving America’s income inequality. He then argued that rate should not be reduced or eliminated because of budget impacts.

The full 30-minute attack ad called “When Mitt Romney Came to Town” is out, and it is really hardcore. Dolloped with a hint of xenophobia (Romney speaks French in the film twice), the film features the roadkill from the freight train of vulture capitalism, the workers who had the misfortune of getting caught up in a Bain Capital leveraged buyout. Romney is portrayed as such an unyielding greedhead that Gordon Gekko would blanch.

Since Mitt Romney will, in all likelihood, be the Republican nominee for President this year (especially given his surge in South Carolina), it’s worth noting his tax plan, which the Tax Policy Center estimates will save $82,000 for every wage earner in the top 1%, while actually raising taxes slightly at the bottom of the income scale.

The LA Times writes about a shifting message for the 2012 election campaign: The President and Democrats will position their party as the defenders of the middle class. Meanwhile, there is a huge income gap between the increasingly wealthy Congress and the voters they presume to represent.

You do have to marvel at the way in which the 1% tries to pull off the trick of evoking sympathy for how hard it is to be them, as if a commentary on income inequality above where it was during the Roman empire is actually just an attack on their character. But that hasn’t stopped the whining.

Nobody had any interest in actually scoring Gingrich’s plan until he surged in the polls. But now, the Tax Policy Center has taken a look. And they found that his plan would give the top 1% a $428,000 annual tax cut, and the top 0.1% a tax cut of $2.3 million. Millionaires get an average $760,000 cut.

In addition to the maneuvers aimed at raising taxes on the rich in California, in New York, where the process to raise said taxes isn’t as byzantine, state leaders have agreed in principle on a deal to increase taxes on the wealthy. And this is a reversal from a vow by Andrew Cuomo from earlier in the year to allow increased taxes on the rich to expire.

What Cain has done on taxes and economic policy is similar to what John Edwards did on health care in 2008. He came out of the box first with a comprehensive plan, and it drew his competition entirely to his left. Even though Cain is being savaged for his wealth redistribution scheme, he’s drawing everyone to his right. Rick Perry’s introducing a flat tax. Mitt Romney endorsed a version of the Paul Ryan plan for Medicare vouchers. It’s become follow-the-leader in the Republican Party, and Cain is the leader. Regressive taxes and wealth distribution upward is the order of the day.