Originally posted by: PJ Stroh
I'm largely fine with the progressive tax brackets we have now. But the tax-bracket system doesnt apply to the overwhelming majority of income earned by wealthy people. And thats the problem. In the 1980's our country started embracing the idea that investors get preffered tax rates over workers....and we've doubled down on that with several tax changes since.
Paychecks get subjected to the brackets. Dividends, captial gains, interest, partnership distributions etc...do not. As a result you have some trust fund brat who has never worked a day in his life (think Don Jr) who pays fewer cents on the dollar in Federal taxes than someone who gets up to an alarm clock and goes into an office (like me). Personally I find that infuriating.
Why not just subject all income regardless of where it comes from to the brackets? I like that idea.
You know PJ, I started writing something really similar to this and then had to run out before I hit "reply". I totally agree with this. What really matters is someone's effective tax rate. There are still too many nooks and crannies in the tax code. I don't love 50% as a top bracket but I'd go there if that meant the totally rich really paid an effective rate of 37% (which is top bracket now) on all of their true income.