And every year the Internal Revenue Code grows absurdly more
incomprehensible, as if it were designed as a jobs program
for accountants, IRS agents and tax attorneys.
I think this is a point people across the political spectrum agree with. It does not follow, however, that simplifying the tax code would require a regressive flat tax. One could easily imagine a simplified tax code that still has progressive tax brackets.
The left will argue that the plan is a tax cut for the
wealthy. But most of the loopholes in the tax code were
designed by the rich and politically connected. Though the
rich will pay a lower rate along with everyone else, they
won’t have special provisions to avoid paying lower than
14.5%.
This would be a massive tax cut for the wealthy, unequivocally – a 25.1 % lower tax rate for the top bracket. The idea that this cut would be offset by closing unnamed loopholes is disingenuous at best. A 14.5% tax rate also conveniently matches the current maximum capital gains tax rate of 15%, which is the effective tax rate the ultra wealthy already pay.
> A 14.5% tax rate also conveniently matches the current maximum capital gains tax rate of 15%, which is the effective tax rate the ultra wealthy already pay
That's exactly the point. So now the middle class can pay what the wealthy already pay.
> A 14.5% tax rate also conveniently matches the current maximum capital gains tax rate of 15%
Well, except that 15% is the next tier down from the top capital gains tax; the top tier is 20%.
Plus the fact that 14.5% does not match 15%. If you don't believe me, I'll give you $14.50 for the "matching" $15.00 and repeat that until you're convinced.
Taxes aren't arbitrarily iterative (they only hit once a year), so your "repeat until you're convinced" is kind of a poor analogy. 14.5% is comparable to 15%, and lower (which incentivises people to quit using the capital gains cheat), but not much lower. That level of sophistication in and of itself shows that this is not total crackpottery, but at least somewhat well-thought out.
You seem to have read the part about 14.5% not matching 15%, but not the part about 15% not actually being the top capital gains tax rate to start with, 20% is.
14.5% doesn't match 15%, though maybe it "close enough" for some purpose, but it even moreso doesn't match 20%, and its not even particularly close.
Long-term capital gains are at 15%. If you know how to set up a corporation, you can basically strategically convert short-term gains into long term, by taking an equity position in your company and (I think, I have not done this myself) withdraw salary as 'dividends', and this is taxed as ltcg as long as you hold a stake in your company for longer than a year.
No, long-term capital gains taxes are on different rates based on the same brackets as regular income tax; for the top income tax bracket, the long-term capital gains rate is 20%. For other income tax brackets from 25% up, the long-term capital gains rate is 15%. For the income tax brackets 15% and below, the long-term capital gains tax rate is 0%.
