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View Diary: How are the rich getting richer? The more they make, the lower income tax rates they pay. Face palm. (141 comments)

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  •  It is reported on Form 1040 and 1099s (3+ / 0-)
    Recommended by:
    johnny wurster, Ian Reifowitz, VClib

    Economically there is an implicit tax on muni debt as they pay a lower interest rate.  The non taxable interest from munis has a large component of subsidy from the Federal government to the government issuing the muni bond.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sat Nov 02, 2013 at 09:40:47 AM PDT

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    •  I know you (1+ / 0-)
      Recommended by:
      Ian Reifowitz

      have to list income from munis on your tax form, but I've never seen it taken into account with someone actually figuring the 1 percenters' true tax rate they pay on ALL of their income.
      And while you may consider the lower interest rate an "implicit tax," and I understand why you would. If I had $20 mill or so, I'd put half or more in t-bills or high rated munis JUST for the safety of it - since it would still generate all the income I could ever possibly need. I think the ability to protect your principal from risk is far and away the primary reason the super rich buy tax advantaged instruments.

      •  Munis can have significant risk (1+ / 0-)
        Recommended by:
        Ian Reifowitz

        See Detroit, Stockton, Vallejo, etc.  We are now about to see the biggest failure of muni bonds with Puerto Ricco.

        The risk of principle and interest with muni bonds is much greater than for Treasuries.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sat Nov 02, 2013 at 10:56:56 AM PDT

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