Why, oh, why are the idle rich taxed less than hard work? I just do not understand why dividends and capital gains are taxed MUCH lower than honest to goodness hard work. Not only do they get a lower income tax rate, they are exempt from FICA taxes. Who makes this stuff up? At minimum, they should be taxed the same. On one hand, the right wants to complain people don't want to work, but what incentive does this tax policy give them? Of course, one (or their parents) must have money to live the lifestyle of the rich and spoiled. But I digress. That should be at the top of the list of any tax reform.
Now, how does that get done? What is the other side's pet issue? Did you say "the death tax"? Here's the way we simplify it and get people on board. Rather than have estate taxes, these taxes on appreciated (and credits for depreciated) investments, would in a sense be deferred. So, when a person passes and their business and investments pass on to their heirs, a tax liability or credit is calculated, however, the liability is deferred until the heir sells the property. What this does is destroys their number one argument of having to sell the family business to pay the taxes. It also encourages that the business or property stay in the family. Can't think of anything more pro-family than that. Only realized gains and losses would be subject to "the death tax".
Now , when a person sells an inherited asset they will get stepped-up basis and have a tax calculated based upon their period of ownership (which can also be a loss or tax offset), but will then also have to pay the deferred tax (or receive the credit) as well. The current system allows for an exemption ($1M which they want to raise), which basically exempts appreciation of assets from taxation. Hell, where can I exempt $1M of income?
And where are those pre-Reagan tax rates? Didn't it take one wage earner back then to support a household? Wasn't the division between the haves and haves not much lower
?
I am done ranting, now it's your turn.