James, the House dividend tax cut proposal apparently still distinguishes between dividends from companies paying taxes and those not paying taxes, as well as dividends from companies paid from other than operating earnings. The proposal also cuts the capital gains tax to 15 percent, the same as dividends. The Senate proposal, instead of distinguishing between dividends from REITs, companies not making operating earnings, etc., simply exempts the first $500 of ANY dividends.
From the very beginning, I have believed that the administration dividend tax cut proposal, of which the House proposal is a minor variation with a cut-off date, is unworkable and impractical, and what's more does almost nothing to create jobs or give an immediate economic incentive. It is a poorly thought out proposal and has virtually no support from economists. Support comes mainly from brokers, who might gain clients returning to the market.
As to treatment of royalties, nothing that I have seen in any of the proposals under consideration would treat royalties any differently from ordinary income for tax purposes. Any change in the treatment of royalties would probably affect ALL types of royalties, including those generated by copyrights, publications, patents, etc. That alternative doesn't seem to be under consideration at all.
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