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If person A makes $100MM in salary and person B makes $100MM in dividend/capgains in 2013, their relative tax rate increase compared to 2012 is about the same:
by downandout 14y ago
If person A makes $100MM in salary and person B makes $100MM in dividend/capgains in 2013, their relative tax rate increase compared to 2012 is about the same: 8.4% increase vs 8.8% increase.
Michael's point was that person A (someone with a high ordinary income) will have approximately double the tax bill of person B (someone with capital gains income) on an absolute basis, and that he believes this disparity to be unfair.
- smsm42 14y agoI'm not sure how to define "fair" but haven't the investment money been already taxed as corporate profits before they are paid out to investors? I know some investment vehicles allow to avoid that but most regular investments do not, as far as I know.
- downandout 14y agoThis is the case with dividends, but is not necessarily the case with other types of capital gains.
- eli_gottlieb 14y agoHaven't ordinary business revenues already been taxed as sales tax when you pay income taxes on them?
- malyk 14y agoAnd why does it matter if it's already been taxed once?
- rprasad 14y agoIf you want to avoid double taxation, you are certainly free to choose a pass-through form of entity. If you choose to create/invest in a corporation, you accept double-taxation as the cost of the benefits afforded by the corporate form.
- downandout 14y agoYou guys are all thinking in terms of forming a business and having income from it. Our tax system doesn't encourage that. Our system heavily incentivizes people to seek capital gains through (for example) stock market and real estate speculation.