Originally Posted by Wizard24
I could not open the links that you supplied from work (actually they just about shut down my computer trying to open them) but I am going to guess that they point out that due to the lower rates on capital gains these millionaires end up paying lower tax rates overall than those whose $$ just comes from ordinary income. While the math on this may be completely true it is disingenuous to use this as a reason to increase taxes on the “rich”. I firmly believe that capital gains should be taxed at a lower rate than ordinary income. Think about it.
What would happen in the IRS raised the capital gains tax to the same 35% rate as ordinary income?
The links talk about income and how many millionaires get taxed at lower rates than middle class workers based on nonpartisan research.
I copied some of the facts from the articles for you
■1,470 households reported income of more than $1 million in 2009 but paid zero federal income tax on it.
■The average federal income tax rate of the richest 400 people in the country in 2008 was 18.11 percent. In 2007 it was 16.62 percent. That is only a little more than just the payroll tax on wages—normally 15.3 percent on a worker’s first $106,800 in wages, counting both the share that workers pay directly and the share their employers pay, which comes out of their wages—let alone the federal income tax on those wages. The tax rates paid by the “Fortunate 400” have plummeted since the mid-1990s, when their average effective rates were about 30 percent.
■According to the Congressional Budget Office, the richest 0.01 percent (those with incomes of $8.6 million and above) paid a combined 17.5 percent in individual income and payroll taxes in 2005, the last year for which such data are available. The group of households with incomes ranging from $45,200–$92,400 paid only a little less on average, at 15.7 percent. The group of households with incomes ranging from $30,500–$45,200 paid 12.5 percent. Of course, there are wide variations within those income ranges, meaning that many middle-class families paid much more than the 17.5 percent average paid by the very rich, while many in the top 0.01 percent paid less than that.
■Due to the so-called carried interest loophole, managers of hedge funds and private equity funds pay 15 percent capital gains rates, and no payroll taxes, on their profits from managing other people’s money. That’s less than what middle-class families pay just in payroll taxes on their wages—let alone what they pay in income taxes. An important part of President Obama’s deficit reduction plan unveiled yesterday is closing the carried interest loophole.
But the point of the Buffett Rule is that some millionaires, not all, are paying lower tax rates than middle income people. This report tells us that nearly 100,000 of them are in this category. In other words, the report confirms that those who are saying that this is a widespread phenomenon are absolutely right. Buffett himself has confessed that he pays lower tax rates than the other people working in his office. If this report is accurate, there are nearly 100,000 Warren Buffetts out there.