The Top 400 tax filers – the very richest Americans – do pay a lower rate of just 18.11 percent of their total income. Why? Many of them are hedge fund managers and people like Buffet — their income is pegged how much their investment fund grows. For some reason, this income is counted as so-called “carried interest” (even though it is not interest at all; it’s more like a performance bonus) and is taxed at the lower 15 percent capital gains rate.
So if they got rid of the "carried interest" rule then that should solve much of the income inequality that Obama keeps harping on. Also it seems that middle income Americans are not really paying their fair share at all according to this:
The numbers change a bit if you look at total income before deductions and tax credits (Adjusted Gross Income), according to another non-partisan group, The Tax Foundation. Here’s how the numbers breakdown using IRS data from 2009 on Adjusted Gross Income for the income groups at issue in this discussion:
- $10 million a year paid 22 percent.
- $1 million to $10 million paid 25 percent.
- $50,000 to $75,000 paid 7 percent.
The middle class pay just 7 percent because of deductions and tax credits that H&R Block get paid big money to uncover. If you go to those making less than $50,000 many of them pay no taxes at all and receive refunds instead. In any case the entire tax code should be overhauled.
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