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If person A makes $100MM in salary and person B makes $100MM in dividend/capgains in 2013, their relative tax rate increase compared to 2012 is about the same: 8.4% increase vs 8.8% increase.

Michael's point was that person A (someone with a high ordinary income) will have approximately double the tax bill of person B (someone with capital gains income) on an absolute basis, and that he believes this disparity to be unfair.



I'm not sure how to define "fair" but haven't the investment money been already taxed as corporate profits before they are paid out to investors? I know some investment vehicles allow to avoid that but most regular investments do not, as far as I know.


This is the case with dividends, but is not necessarily the case with other types of capital gains.


Haven't ordinary business revenues already been taxed as sales tax when you pay income taxes on them?


And why does it matter if it's already been taxed once?


If you want to avoid double taxation, you are certainly free to choose a pass-through form of entity.

If you choose to create/invest in a corporation, you accept double-taxation as the cost of the benefits afforded by the corporate form.


You guys are all thinking in terms of forming a business and having income from it. Our tax system doesn't encourage that. Our system heavily incentivizes people to seek capital gains through (for example) stock market and real estate speculation.




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