Did You Know Capital Gains Don’t Pay Payroll, Medicare Taxes?
Just saying. Not only is Capital Gains taxed at the low rate of 15% compared to the top wage tax rate of 35%, but these gains are free of payroll taxes and taxes that pay for Medicare and Medicaid.
Nice being wealthy hey? From an article by Bruce Bartlett, former top advisor to people like Ron Paul and President Ronald Reagan.
Significantly, much of Mr. Romney’s capital gains income achieved this treatment through a special tax loophole called carried interest. According to recently released documents, executives at Bain Capital, where Mr. Romney made the bulk of his estimated $250 million fortune, saved $200 million in federal income taxes and another $20 million in Medicare taxes because of the carried interest loophole…..
As long as a taxpayer decides when or if to realize gains for tax purposes, that is a very valuable loophole even if gains are taxed at the same rate as ordinary income. For one thing, a taxpayer can easily match gains with losses to avoid having net taxable gains. And, of course, capital gains would still avoid the 15.3 percent payroll tax, which applies only to wage income……
Beezer here. No wonder the wealthy continue to amass more and more of the nation’s income. They don’t have to pay taxes at the same rates most Americans pay. We’ll never get out from under deficits and debt with the existing tax system. To say it needs a major overhaul and simplification is a no brainer.