Capital Gains | featured news

Under Paul Ryan's plan, Mitt Romney wouldn't pay any taxes for the next ten years -- or any of the years after that. Now, do I know that that's true. Yes, I'm certain. Well, maybe not quite nothing. In 2010 -- the only year we have seen a full return from him -- Romney would have paid an effective tax rate of around 0.82 percent under the Ryan plan, rather than the 13.9 percent he actually did. How would someone with more than $21 million in taxable income pay so little? Well, the vast majority of Romney's income came from capital gains, interest, and dividends. And Ryan wants to eliminate all taxes on capital gains, interest and dividends.

Paying taxes is bad enough. Finding out you pay a larger percentage of your income than presidential candidate Mitt Romney or billionaire Warren Buffet makes it even worse. But that's the case for millions of American, who pay higher rates because most or all of their income comes from a salary rather than dividends. The capital gains tax rate on investments currently tops out at 15 percent, while the highest rate for earned income is more than twice that at 35 percent.

Why are "capital gains" taxes so much lower than taxes on other income? The reason capital gains taxes are lower is because most of the income of the rich is from capital gains. And the reason most of the income of the rich is from capital gains is because capital gains taxes are lower.

Taxes on high-income earners would rise by nearly $1 trillion over the next 10 years, under the budget plan. Capital gains and dividends will be taxed at 20% rather than 15%.