Interesting reading in the New York Times this morning from James Stewart, who reviews IRS data on 2009, a bad year in the stock market but not a bad year for the 400 highest income U.S. taxpayers.
The 400 reported, on average, $202 million in taxable income. But their effective tax rate was below 20 percent. How can that be, when the wing nuts keep yammering about the height of the U.S. graduated income tax’s marginal top rate of 39.6 percent? It’s because their capital gains and dividend income (think a Walton who owns millions of Walmart shares) enjoy preferential tax treatment.
It’s a wonder more of the 400 don’t move to Arkansas. Thanks to House Speaker Davy Carter, the very richest just got a total exclusion from the capital gains tax for whopping big windfalls.
Remember this, too, when a Republican comes whining to you about how the capital gains tax break really benefits everyone. It’s hooey. The benefit is concentrated at the high end of the income scale.
The 400 richest Americans accounted for 16 percent of every capital gains tax dollar reported by 14 million taxpayers in 2009. One in every $7 went to one of 400 people. That’s who Davy Carter and Co. were looking after in the 2013 legislative session.