| > The government actively intervenes against the viability of labor by taxing labor income more heavily than capital income (both by the preferential tax rate for capitalism gains compared to “regular” income The reason the long-term capital gains rate is lower than the top earned income rate is inflation. If you buy an asset for $100, there is 20% inflation over some years and you sell it for $130, your actual profit, the real increase in the value of your asset, is $10 rather than $30. This is why the lower rate doesn't apply for short-term investments. What they ought to do is to calculate the capital gain in light of inflation (i.e. adjust the tax basis for inflation since the purchase date) and then use the same tax rates as for earned income. But the way they are doing it isn't exactly favoring long-term capital income. You can currently lose real value and end up owing capital gains taxes because the reduction in real value was less than the inflation over the period you held the asset. Which isn't particularly relevant for the people just scraping by anyway. The long-term capital gains rate is lower than the highest earned income rate, but it's not lower than the rates low income people pay. > and also because labor income, especially well into the middle class range, faces additional taxes—payroll taxes—on top of the taxation of “regular” income.) Yes, the way payroll taxes are structured is dumb. Especially the cap past which rich people no longer have to pay them. (And the fact that social security makes higher payments to rich people rather than the same for everyone.) But this is not really the main problem either. FICA is a total of ~15%, including the employer's portion. That's not nothing, and we should fix it, but the scope of the problem is larger than a 15% difference. |