[zamfi]

Option grants are taxed as income too, the advantage to options is that any increase in stock price can be taxed as capital gains if you exercise the option immediately and hold the stock for more than 1 year.

Direct stock grants are also taxed as income, with the same caveat that stock value appreciation can be taxed at the lower capital gains rate.

It sounds like your beef is with the capital gains tax rate, not income tax itself. :)

I can't speak to the culture of "tax avoidance is honorable", but if the federal government is trying to incentivize people to behave in a certain way (say, to invest in stocks in the long-term) by giving folks who do that a tax break...then your beef is really with the government wanting people to invest long-term in stocks. That seems like a more difficult argument to make.

[jbooth]

My beef is precisely with the culture of tax avoidance and the loopholes that you're so neatly sidestepping in this conversation. Ok, maybe it's not quite so bad as I'm making it out until you consider the loopholes and everything. In reality, the overwhelming majority of people earning > $1 million are probably paying a lower % of their income in taxes than I am, after deductions, spending a significant chunk of my yearly salary on accountants, the whole mess. That's ridiculous.