For much of that 20 year period the top tax rate for salaried income was over 40% and the maximum capital gains tax rate was over 20%. For 2011 the rates were 37% and 15%. The table shows how much taxes on rich taxpayers have gone down. When you look at Federal payroll taxes (for Social Security and Medicare) and state income taxes, sales taxes, and property taxes, the formerly "progressive" tax rates where rich pay higher taxes than the poor, have become "regressive" taxes that fall more heavily on the poor. Romney's claim that 47% of potential taxpayers pay no taxes, ignores all taxes except federal income taxes.
If Romney were a loyal, patriotic American earning as much as he does, he should pay something on the order of 30% of his income in federal taxes, not less than 15%.
Romney and other Republican tax bashers say capital gains taxes have to be low, because they experience double taxation. Their companies pay tax, and they get their investment income only after the companies are taxed. But if the companies paid no taxes, workers salaries could be higher, too. Why don't salaried workers get a double taxation break? In addition, capital gains taxes are paid only after an asset is sold. Therefore, many wealthy individuals have the earnings tax free for years.
For example, if you buy some stock for $100, and it goes up $50 the first year. You have made $50, but you pay no tax on it, because you don't sell it. The next year, if the stock goes up another 50%, you make $75, but you pay no tax on that $75, plus you have made money on ALL of the profit you made the first year, because that profit was not taxed. A salaried worker pays taxes on all of his income in the year he makes it; there is no benefit from compound interest, i.e., interest on the prior years' interest. On the other hand, a rich person can hold a profitable asset for many years without paying any taxes on it, earning profit on the earlier profit that was not taxed. Then when he sells it, he pays much lower taxes than someone who works for a living. Basically the government gives him an interest free loan of the taxes due each year until he sells the asset. Who's the "welfare queen" in this picture?
It doesn't seem fair to me. It's a good deal, but it's not fair.
| Year | Top Regular Rates | Max. Capital Gains Rate | Capital Gains Taxation Notes | |||
| Wages & Other Earned Income | Unearned Income Except Cap Gains | Above Joint Taxable Income of | ||||
| 1916 | 15% | 15% | $2,000,000 | 15% | Realized gains taxed same as other income | |
| 1917 | 67% | 67% | $2,000,000 | 67% | ||
| 1918 | 77% | 77% | $1,000,000 | 77% | ||
| 1919-21 | 73% | 73% | $1,000,000 | 73% | ||
| 1922 | 58% | 58% | $200,000 | 12.50% | Maximum rate | |
| 1923 | 43.50% | 43.50% | $200,000 | 12.50% | ||
| 1924 | 46% | 46% | $500,000 | 12.50% | ||
| 1925-28 | 25% | 25% | $100,000 | 12.50% | ||
| 1929 | 24% | 24% | $100,000 | 12.50% | ||
| 1930-31 | 25% | 25% | $100,000 | 12.50% | ||
| 1932-33 | 63% | 63% | $1,000,000 | 12.50% | ||
| 1934-35 | 63% | 63% | $1,000,000 | 31.50% | Sliding exclusion of 70%>10yrs 0% <1 small="small" yr.="yr."> | |
| 1936-37 | 78% | 78% | $2,000,000 | 39% | ||
| 1938-40 | 78% | 78% | $2,000,000 | 30% | Excl. 50%>2yrs; 67% 18-24mo; 0%<18mo 30="30" ax="ax" small="small"> | |
| 1941 | 80% | 80% | $2,000,000 | 30% | ||
| 1942-43 | 88% | 88% | $200,000 | 25% | Exclusion 50% > 6 months; 25% maximum | |
| 1944-45 | 94% | 94% | $200,000 | 25% | ||
| 1946-47 | 86.50% | 86.50% | $200,000 | 25% | ||
| 1948-49 | 82.10% | 82.10% | $200,000 | 25% | ||
| 1950 | 84.40% | 84.40% | $200,000 | 25% | ||
| 51-64 | 91% | 91% | $200,000 | 25% | ||
| 64-67 | 70% | 70% | $200,000 | 25% | ||
| 1968 | 75.30% | 75.30% | $200,000 | 26.90% | Transition | |
| 1969 | 77% | 77% | $200,000 | 27.50% | ||
| 1970 | 50% | 70% | $200,000 | 32.30% | ||
| 1971 | 50% | 70% | $200,000 | 34.30% | ||
| 1972-75 | 50% | 70% | $200,000 | 36.50% | 50% exclusion - minimum tax effects | |
| 1976-77 | 50% | 70% | $203,200 | 39.90% | ||
| 1978 | 50% | 70% | $203,200 | 39% | ||
| 1979-80 | 50% | 70% | $215,400 | 28% | 60% exclusion | |
| 1981 | 50% | 70% | $215,400 | 23.70% | 50% or 60% exclusion | |
| 1982-86 | 50% | 50% | $215,400 | 20% | 60% exclusion | |
| 1987 | 38.50% | 38.50% | $192,930 | 28% | Maximum rate | |
| 1988-90* | 28%/33% | 28%/33% | * | 28%/33% | Realized gains taxed same as other income | |
| 1991-92 | 31.90% | 31.90% | $82,150 | 28.90% | Maximum rate | |
| 1993-96 | 43.70% | 40.80% | $250,000 | 29.20% | ||
| 1997-2000 | 43.70% | 40.80% | $275,000 | 21.20% | ||
| 2001 | 43.20% | 40.30% | $297,350 | 21.20% | ||
| 2002 | 42.70% | 39.80% | $307,050 | 21.20% | 18% top capital gains rate in rare cases | |
| 2003-05 | 39.00% | 36.10% | $311,950 | 16.10% | Reduced maximum rate which also applied to dividends | |
| 2006-07 | 38.60% | 35.70% | $336,550 | 15.70% | ||
| 2008-09 | 38.30% | 35.40% | $357,700 | 15.40% | ||
| 2010-12 | 37.90% | 35.00% | $373,650 | 15% | ||
| 2013-on | 44.60% | 44.60% | $396,100 | 25% | 21.2% income tax plus 3.8% Medicare tax; also on dividends | |
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