patrick.net

Strategist says

It found that the higher you go up the income ladder, the greater share of income comes from capital gains.

No shit. Capital has been taxed lower than wages for a long time. Until it's more even, things will not be pretty for the middle and upper middle class.

tr6 says

Capital has been taxed lower than wages for a long time.

I save thousands of dollars each year on my federal income taxes from this. Something like 5000-6000 just on my 2014 federal income taxes alone. And I am by no means rich. Capital gains shouldn't be taxes much, it's how middle class people like me fund their own retirement, since 401K contributions have some really low limits.

Zzyzzx-

Why should capital be taxed less than labor??

And I'd be willing to bet that you'd be better off with higher capital gains taxes and lower income taxes.

Why not eliminate federal income taxes altogether?

Replace them with a federal land tax

I mean, especially if you're arguing for fairness, or clawbacks against inequality.

How is it in any way fair that americans pay any income tax, at all? Its economically stupid and harmful. Tax our easiest target, our most valuable resource, and the one thing nobody created, its just here. The land

I must say I was somewhat shocked when I did my taxes this year as I'd been stuck in the capital gains good, dividends bad paradigm. Qualified dividends, very good too!

The real scandal is the huge tax breaks on capital gains on real-estate.

sbh says

At the very least, in order to give incentive to do that so un-American thing: save. It's a simple strategy: don't have kids; persistently shelter and invest the max under law; start as early as possible. People should try to do it even without the preferential rates, but no, they have kids as if it were without consequence; they eschew retirement shelters and take on debt.

I think the issue why the middle and lower class aren't saving has much less to do with tax rates and much more to do with stagnant wages. Increase capital gains taxes, lower income taxes and I think it's at least 50/50 that saving will increase.

sbh says

At some level of wealth the rich and ultra rich don't need the lesser tax on capital, and it just adds to grotesque wealth disparity. Lowering the cap gains tax for Joe six-pack probably wouldn't persuade very many work-a-day types to fully contribute to IRAs, but it's the right thing to do. Americans would find a reason to ignore it anyway. They always do.

I'd be OK raising cap gains on anything over a certain amount---that'd be a decent compromise.

The rationale for low capital gain tax is because money deployed for investment is post-tax, and low tax rate would encourage ordinary folks to save and build wealth. Notice capital gain is same as income tax rate if hold equities less than one year. The goal is to encourage folks to hold the equities longer than one year and discourage trading.For owner-occupied house, even more goodies.

The land tax suggested by errc is interesting.