Thursday, April 15, 2010

Tax Breaks for the Wealthy

This is a very misleading statement, and depending on the motives of the speaker, it is also biased. Most Americans hear this and think that somehow the 'wealthy' are paying a lower percentage and/or a lower absolute amount than them. The 'wealthy' pay both a higher percentage of their income and a higher absolute. There are of course exceptions, such as Warren Buffett, who pay a lower percentage (but not an absolute level) but this is because nearly all of this income comes from capital gains. Capital gains are returns on investments and receive a lower tax rate
because there is an element of risk that one must factor into the true cost. You may win, or you may lose. It is different than just collecting a paycheck.

No comments: