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Originally Posted by Karma Police  Thanks for your thoughtful replies!
Regarding income tax, we have something close to a "flat tax" for most people now. Although the top income tax bracket is nominally 35% or so, investment income and earned income above the wage base isn't subject to employment/self-employment taxes of about 12 to 15% (it's a little complicated because of the 2.9% medicare tax).
For example, a wage earner may only pay income tax of 18%, but must also bear employment tax (employer and employee parts) of about 15% on earned income, making the total tax rate approximately 33%, compared with 35% for ordinary investment income at the highest bracket or 15% for capital gains and dividends.
With that said, my main focus was on the estate tax. While I agree steep income tax rates create disincentives, the estate tax is a different story. A high estate tax rate isn't likely to cause anyone to change their date of death.  |
We are nowhere near a flat tax. Our tax code is so utterly complicated the IRS can't even follow it.
The top 5% of wage earners pay more than 80% of the tax burden. Fairness? I think not.
Our current tax code punishes achievement and promotes stagnation.