I agree with this. Folks earning $200k-$500k are paying most of the taxes because they have little-to-no political influence, and they're easy scapegoats because most people make less than them. This is the glass ceiling of the US tax code.
"The top 1 percent of income earners, those having an adjusted annual gross income of $480,930 or higher, pay about 39 percent of federal income taxes. That means about 892,000 Americans are stuck with paying 39 percent of all federal taxes."
Another source about who is not paying any taxes, and who receives money from government - https://nypost.com/2016/02/24/45-percent-of-americans-pay-no...
How much exactly should be top 1% be paying to no longer be blamed for not paying taxes?
The wealthy folks everyone gets in an uproar over don't pay any taxes, have the political power to avoid it, and even if they didn't, would be able to hire lawyers and accountants to help them avoid it. As a result, it's the people trying to claw themselves into the wealthy class that are most penalized by income taxes.
Let's go to a consumption tax with some kind of cash prebate to make sure the first $10k-$20k of spending is untaxed, and dispense with income taxes that have largely failed to do what they were designed to do.
There is an undue burden on the middle and upper middle class.
I am imagining this and I immediately also imagine that quite a lot of income and/or capital gains taxes were paid during the accumulation phase of that $10M.
I suppose she could have inherited $10M tax free[1] but whoever bequeathed it to her then paid the taxes on it during the earning/accumulation phase.
My point is, comparing the present day taxes on dividends on a nest egg to the income taxes someone else is paying is not a very useful comparison. All else being equal it should not be interesting or provocative to see the income taxes exceed the nest egg taxes in an example like yours.
[1] Estate tax exemption in 2018 is $11M http://www.wealthmanagement.com/estate-planning/2018-estate-...
I believe the point is that in the example above, someone living off their nest egg, able to do nothing, are paying less in taxes than someone still in the workforce, earning.
This exacerbates the concerns over wealth inequality because those who have built wealth, can then grow their wealth at a lower tax rate than those stuck at the bottom of the income ladder.
EDIT: Thanks JediWing - I have no clue why I thought dividends are taxed at the same level. Thank you correcting me.
This means that a stock grant with a generous dividend is a loophole for high earners...in addition to simply adding complexity and magic thresholds to the tax code. It seems to me to be just bad policy.