Several points from a NYC taxpayer: 47.62% is the top marginal fully loaded tax rate on ordinary income. That is, 35% individual federal plus 8.97% state tax p

Several points from a NYC taxpayer: 47.62% is the top marginal fully loaded tax rate on ordinary income. That is, 35% individual federal plus 8.97% state tax plus 3.88% city, less rounding and maybe a few dollars of unused credits. This is the rate on the next dollar of ordinary income (and the number you use if you wish to maximize your claimed tax rate). The claimed capital gains number of 27.63% is 15% plus that same amount for state and local taxes, which do not treat capital income differently (the .62% on the end of both is the giveaway). Neither of these numbers is an effective tax rate (=tax actually paid/pretax income), or "tax pressure," whatever that is -- at my guess, Mr. Wilson probably pays effective tax in the 30-40% range, depending on how much capital gains he realized in the year. On capital gains rates generally, tax does work on the margins, but this means that we should worry about what kind of investments are incentivized by lower capital gains rates. I seriously doubt that a Mr. Wilson taxed at the regular income rate for capital gains would put even one fewer dollar into his fund, making 20+% pretax, if his other choice were, as he says, the mattress making 0%. Even at equal income and capital gains rates, the incentive to maximize your returns is pretty strong, so the idea that the differential rate is changing behavior in a useful way needs more analysis than Mr. Wilson gives it. For corporate taxes, effective rates are indeed what matters when comparing tax burdens since corporations get such a variety of credits; that said, the fewer deductions/lower rates tradeoff is free economic growth and we should do it (it'll never happen, though, since congress is too dysfunctional). And last on "double taxation": gopi is right that most corporations are organized as passthrough entities -- they pass all income through to their owners, who then pay tax on it. Those that aren't do have lower taxation of dividends to make up for the equivalence of share buyback and dividends.