The truly wealthy people do not gain their wealth through income. They get it through capital gains ( stocks, homes, asset value increases ). Capital gains ( long term ) are taxed at 20%.
Your sentiment that the truly rich make their money outside of a typical paycheck is correct though. It’s a balancing act of how do we tax people who have accumulated so much wealth in capital vs taxing capital so much that people don’t invest in it.
I don’t pretend to have the answer there but spreading disinformation that professional working people would be hurt by a 70% rate on every $1 over $10 million is pretty irresponsible.
Just like lowering the highest tax bracket and tax rate lowered the tax brackets and tax rates below it. Creating a new highest tax bracket will do the opposite.
But then again, it's my opinion not "disinformation".
To make statements that a 70% bracket above $10 million would negatively affect professions that are typically upper-middle class (not $10 mil/year) is misleading at a minimum.
So first: how many doctors, lawyers, software developers, traders, small businesspeople, or etc. make over $10M in income? (You wrote "small business," but to be clear, we're not talking about business tax rates, we're talking about personal income.) In 2016, less than 20,000 IRS returns showed combined adjusted gross incomes of $10M or over. (That includes married couples pooling their income.)
So for the incredibly vast majority of taxpayers, adding another tax bracket higher than the ones established now would have no effect at all. Period. Given that the top tax bracket in 2019 doesn't kick in until an AGI of $510K (or $612K for married), what are we talking about? Say, a new 50% tax bracket that starts at 5M and a 70% one that starts at 10M? How many people would truly be affected by this? Far under a million. Quite likely well under 200K.
My mother had a financial adviser years ago who half-joked that his life goal was to pay personal income taxes of $1M a year. That gets at an essential truth that people who think that this tax would "hurt" people seem to miss. If I was in a position where a 70% marginal tax rate on income over $10M a year had any material effect on me whatsoever, it's not an exaggeration to say that I'd be too rich to care.
The super rich make about half their income via capital gains, and the rest via various forms of income such as dividends, business income, etc. So such a change would certain impact at least a reasonable portion of their income. It does raise the question of whether a flat rate for capital gains makes sense.
That just means that the capital gains tax needs to be made progressive like income tax to cover those people.
If we're reforming income tax, there's no reason to not reform the capital gains tax at the same time.
Yes, they do. Gaining wealth is income. (It may be income that is subject to favorable tax treatment, but it's still income.)
> They get it through capital gains ( stocks, homes, asset value increases ). Capital gains ( long term ) are taxed at 20%.
You can add a new top bracket and tax long-term capital gains as normal income at the same time. Though if you do the latter, you should also:
(1) Allow recognizing expected income for tax purposes in advance of realizing them, and also allow deferring large windfalls over a period of years, and
(2) Inflation-correct asset basis values and balances of anticipated income on which tax has been prepaid.
Not many devs are making 1m+ salaries.
https://www.bankrate.com/finance/taxes/tax-brackets.aspx
Edit: To the people downvoting, I'm well aware that the current bracket won't be taxed at 70%. But there is a lot of room between $500K and $10 million. And I have feeling that there will be many brackets between the current top bracket and the new one.
> The New York Democrat kicked off a debate within her party in a Jan. 6 interview with "60 Minutes" during which she said she would support setting the highest tax, which she said would kick in at individuals 10 millionth dollar of income, at 70 percent.
Edit: I stand corrected. The picture in the article doesn't mention the new $10m tax bracket, but the actual poll question did.
> "AB2: Currently the top tax rate is 37%. Would you favor or oppose a tax proposal that would apply a 70% rate to the 10 millionth dollar and beyond for individuals making $10 million a year or more in reportable income?"
So, you are arguing against your feeling, and not the actual proposal at issue?