Comments | tongodeon: Q: How much taxes do "the rich" pay?

tongodeon

Q: How much taxes do "the rich" pay?

Oct 25, 2010 19:05

It's election season, which means it's also "fact check political discussions between my liberal Mom and conservative Dad" season. Today Dad sent me a simple question with a complicated answer:

What's the accuracy in Mom's blanket statement:
"The rich (defined as having income over 2 million) only pay 16% income tax and should pay more."On one ( Read more... )

dad, tax, politics

Comments 6

ikkyu2 October 26 2010, 02:23:01 UTC

Do you ever think that maybe that definition of "rich" isn't very good?

What about people who hold billions of illiquid assets and don't make much income off them; but what income they make, a few mil or so, is all unearned? Those people have wealth, not income. Why aren't they the "rich"?

tongodeon October 26 2010, 02:28:30 UTC

If someone's income is "a few mil", whether they've "earned" that income or not, I think that makes them "rich" by mom and dad's definition.

mmcirvin October 26 2010, 03:01:37 UTC

They're rich the old-fashioned way!

loic October 26 2010, 05:44:43 UTC

The wealthy are much classier than the rich.

jwgh October 26 2010, 03:32:34 UTC

I suspect your mom's figure is based on many rich folks' income coming primarily from investments. The long-term capital gains tax is 15% apparently. http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

freeasinbeer October 26 2010, 14:56:08 UTC

perhaps there's a connection to this:

http://www.tax.com/taxcom/features.nsf/Articles/0DEC0EAA7E4D7A2B852576CD00714692?OpenDocument

"In 2007 the top 400 taxpayers had an average income of $344.8 million, up 31 percent from their average $263.3 million income in 2006, according to figures in a report that the IRS posted to its Web site"
...
"Their effective income tax rate fell to 16.62 percent"

and as you guessed, it's because essentially all of their income was in the form of long term capital gains.