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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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  •  rt - income from muni bonds is reported (2+ / 0-)
    Recommended by:
    johnny wurster, Ian Reifowitz

    and included in the income statistics. Because muni bonds are free from federal tax it is one reason the wealthy have lower effective tax rates than the top marginal rates might suggest. The other element is long term capital gains.

    But yes, the muni bond interest income is included and has a very large impact on effective tax rates.

    "let's talk about that"

    by VClib on Sat Nov 02, 2013 at 10:05:04 AM PDT

    [ Parent ]

    •  The original post (1+ / 0-)
      Recommended by:
      Ian Reifowitz

      says the percentage is based on ADJUSTED gross income, which does not include non-taxable income. I've never seen a figure that used gross income. That 24 percent is 24 percent income -not including tax free income.

      •  I mean someone who inherits (2+ / 0-)
        Recommended by:
        greengemini, Ian Reifowitz

        $100 million and invests it all in Tbills and long-term AAA + municipal bonds would make $3.5 million or so even in today's low interest rate environment and not pay a single cent in income taxes. And I'm sure there are people like that.
        That just seems crazy.

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