[–] polygontranslucent 0 points 5 points 5 points (+5|-0) ago
Income tax is on income, capital gains tax is on capital gains, generally speaking assets aren't taxed ( other then something like property tax )
So if you have a million dollars in the bank, that is not taxed, but the interest on it is, if you have a million dollars in stocks the value of the stocks aren't taxed, what you earn is, or in the case of a loss, deducted from your income.
Special rules apply a many cases, for example the sale of you primary home isn't subject to capital gains.
A top marginal tax rate of say 90% as it was back in the 1950s doesn't mean people pay 90% of their income in taxes.
http://www.investopedia.com/ask/answers/05/marginaltaxrate.asp
Then there are ways to avoid the tax, namely don't take it as income. A business owner for example could plow money back into his business instead of taking a high income to avoid the income tax. Money could be put into retirement funds, or some type of a tax free investment.
http://www.forbes.com/sites/baldwin/2011/02/10/ten-ways-to-invest-tax-free/
[–] Someone-Somewhere 2 points 4 points 6 points (+6|-2) ago
Or you could adjust the rest of the taxes so that she paid less in income taxes before & after.
[–] [deleted] 4 points 3 points 7 points (+7|-4) ago
[–] nicky_haflinger 2 points 3 points 5 points (+5|-2) ago
We have been at that level before. Exceptionally high marginal rates come with exceptionally many exemptions and loopholes. Likewise as you note it is an income tax. The sudden relative jump in CEO pay for example didn't come with a sudden relative jump in CEO lifestyle, it was rather a symptom of lowering marginal rates leading to moving from 'in kind' compensation where the corporate jet is effectively private property to the corporation selling the jet to the CEO that now makes ten times as much money. At best this claim by Bernie is red meat for a base that is historically and economically ignorant. At worst Bernie is historically and economically ignorant. We will have a while to find the truth.
That's so cute. Walton family members increase their wealth by $52 million before lunch.
Source: This article and the assumption that their wealth increases 5% per year (which is almost certainly absurdly low - 15% is more likely) and simplified math. I estimate Christina Walton makes $52M every 10 hours.
[–] Entomo 1 point 6 points 7 points (+7|-1) ago
You apply that high income tax rate on all money earned over some high dollar figure. Simplified version:
If I make $25,000 per year, I pay 25,000 * 0.05, or $1,250 per year.
If I make $50,000 per year, I pay 5% on the first $25,000 and 15% on the amount above $25,000 ($3,750) so my total tax bill would be $1,250 + $3,750 = $5,000. Note I would NOT pay 15% on all $50,000 - only the amount over $25,000.
So someone making $500,000 a year would pay <does math/> $212,500. Someone making $1,000,000 a year would pay $90% of the amount over $500,000 ($400,000) for a total of $662,500.
Note that the above is applied only after all deductions, etc. Rich people are really, really good at finding loopholes in the tax code so figure they're hiding half. If that assumption is true, $2,000,000 in income results in $662,500 in taxes, or an effective tax rate of 33%, despite the OMG I'M PAYING 90% YOU'RE KILLING ALL THE JOBS hysteria which would ensue if this ever came up in Congress.
[–] jamesed 0 points 2 points 2 points (+2|-0) ago
I'm sorry that is not how taxes work in the United States. That is generally how taxes work in Europe. On the tax forms in this country your tax is figured on your adjusted gross income. So if you have an adjusted gross income of $500,001 and you pay a 90% tax marginal Tax rate, then you are paying $450,000 in taxes leaving you a disposable income of only $50,000 and small change, or about the same amount as the guy making $100,000.
And as for JOBS. Remember Carter (president in name only) and his 10% surtax on luxury Items. The 10% tax was levied against Automobiles in excess of $30,000, boats in excess of $100,000, aircraft in excess of $250,000, furs and Jewelry in excess of $10,000. The tax was supposed to generate 9 billion dollars for the general fund. Well it was repealed after 2 years, (Luxury car tax lasted until 2005.) There was also the negative impact as the loss of jobs due to the reduced sales of Boats, and Aircraft as well as the equipment that went into the boats and aircraft, you know instruments, radios, radars, auto pilots, engines, safety equipment, also the maintenance personnel needed to maintain the big brutes as well as docking and parking fees cost over 45,000 jobs. These were generally considered good paying jobs with an average tax generation of $3000 for each job. So you you do the math 45,000 times $3000 was over $135,000,000 loss in taxes. We won't even get into the loss of social security, or the state and local taxes that went away. No wonder congress got smart after 2 years and scrapped the whole dammed thing.
Now you know why Socialist countries are generally economic basket cases where you can't even find toilet paper. Or as M.T. (Margret Thacher) said; "Socialism is a very fine form of government, Until you run out of other peoples money."
JD
[–] TheCompanionCube 0 points 5 points 5 points (+5|-0) ago
This post is wrong. Being in a certain tax bracket does not mean your entire income is taxed at that percentage.
http://www.irs.com/articles/income-tax
http://www.bankrate.com/finance/taxes/tax-brackets.aspx
" For example, if you move from the 25% tax bracket to the 28% tax bracket, you may think that all of your income is taxed at that higher rate. However, only the money that you earn within the 28% bracket is taxed at that rate. "
[–] Entomo ago
Further evidence you are incorrect. Tax tables for 2014. Note the absence of any jump in "taxes due" which would result in ALL of your AGI suddenly being taxed at a higher rate. Also note on page 88, the actual formulas for people who's AGI is over $100k.
I hope you haven't turned down any overtime because of your belief that earning more would mean you actually got less in take home pay if you passed some threshold in income.
[–] Racer_the_observer ago
Growth and prosperity in the USA was highest when taxes on the rich were highest. The rich have now turned things around.