Quote:
Originally Posted by Dragonitti
When I started making $52k a year, I got a letter telling me I've entered another tax bracket and how % of taxes paid would increase. Didn't phase me. What person would look at themselves and say...Oh, I better not try and earn any more money because I will get more in taxes....No one. You going to continue to rise in income level. I'm expected to be around the $70k range within the next 6-12months and my field taps out around $120k yr. Would you fear getting a better job paying $100k yr just because you will get more taxes taken out on you than when you were getting 25k yr working at the call center when you were 18? Answer is no. So, it makes no sense to me that if you are pushing $250k that you should be paying less in % of income tax.
Regardless of what Warren Buffet is taxed on, the Rich are still paying LESS in % taxes than the middle class.
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You are still far from the next bracket. If your income is 70, you likely have multiple deductions that are pretax, so your taxable income is still quite a bit less than 70.
Without deductions I'm just over another tax level and would lose a few thousand in takehome without those deductions, it'll happen eventually, not worried.
In theory everyone can lower their average tax income percentage through long term investments but obviously the more you invest the more benefit you get in terms of capital gains taxes lowering your average taxes.
Example, if you made 100k taxable income only, you'd pay $21,617 in taxes (tax rate of 21.617%). If you made that same 100k taxable income, but also made 100k in long term capital gains taxes you'd pay $36,617 in taxes, but, that tax rate is now 18.3085% because of the long term capital gains tax rate of 15%. If you made that same 100k but made 200k in long term capital gains you'd pay $51,617 in taxes, which is a tax rate of 17.2057%.
That's obviously a simple look at it and we'll assume no losses.
So, yes, the tax laws favor investments. Should the capital gains tax be based on the same scale as income/wages, maybe, but the end fact is that the more you make in WAGES the more taxes you pay % on those WAGES.
Everyone pays the same rate on long term capital gains (well some pay zero percent if your total income including capital gains are less than $34501.00).
Short term is taxes federally as regular income so if all of Buffets investment income was short term he would be paying 35% tax rates across the board... but obviously they are not short term.
I understand your point, but if you change that it will affect investors who are just starting out a lot more than people like Buffet (by affect I dont' mean % or dollar amounts, but the point of the lower capital gain taxes is to encourage long term investments, remove that and why would anyone but the super rich bother investing?).
Again, IMO we need to focus on real problems. If we didn't bleed money we could LOWER EVERYONES taxes. We need to REDUCE government spending and waste more than we need to increase taxes on the rich (and or everyone else).