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Originally Posted by Baraka_Guru
ace, I think the issue for many amongst the rich is that it's better to make $10 million at the top marginal tax rate than it is to make only $100,000, albeit at a lower tax rate.
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If true why do people like Buffet and Gates pay themselves trivial amounts compared to their real wealth. These men through most of there tenure among the wealthiest people in the world could have paid themselves $10 million or more in salary but did not. They hold their wealth in unrealized capital gains and don't pay dividends (MSFT just started). Capital gains are taxed at a lower rate, salary and dividends are taxed at a much higher rate. To a "poor" person what you wrote is true - but if a "poor" got to certain income levels, there behaviors would fall into a pattern followed by most other people in that same wealth category.
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I mean, you get guys like Warren Buffett who think the rich should be taxed more. He's pretty rich, ain't he?
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He wants you taxed more. He avoids paying taxes.
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Anyway, I think we're talking mainly about progressive taxation here, not overall operating expenses and other costs of doing business, or even capital gains taxes or estate taxes. The top income tax rate is 35%. This means what you make above $375,000 is taxed the same rate, regardless whether it's another $375,000 or $3.75 million.
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The real marginal tax rate can be much higher than 35%. People in high marginal brackets tend to hire expensive consultants to help get into a lower real marginal tax rate.
Even looking into this legal tax avoidance business, don't you agree that it is unproductive in terms of real economic activity. Wouldn't society be better off if these minds and resources worked on activities other than saving "rich" people tax dollars? At lower rates these resource would be employed doing other things, potentially much more productive things.
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Also, capital gains are capital gains; it's not like investors are going to stop investing because they can't keep their 3 to 5% tax cut every time they take a profit.
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You suspend logic. Every decision made has a pivot point, where a yes becomes no or a no becomes yes. 1%, 3%, 5% can make a measurable difference in some cases.