04-05-2012, 03:12 PM
(This post was last modified: 04-05-2012, 03:16 PM by Pantalaimon.)
(04-04-2012, 10:43 PM)kandrathe Wrote: I think we've talked about this before, but the difference between the rich and the middle class here is that the wealthy earn more income through investments which are taxed at 15% (and allow for deduction of capital losses over successive years), while the middle class pay between 15% and 34% depending on their income levels. Here is why, as a percent of total income, a person like Warren Buffet can pay less than his secretary.
As a (slight) aside, what's the popular definition of "middle class" these days? I'm used to it being manager-level and above, generally white collar, but a lot of the political rhetoric about the middle class seems to be talking about what I would call the "working class" or the perennial "working (wo)man". Has that terminology gone out of vogue in the mainstream? For example, according to Wiki individuals with a marginal tax rate of 15% in the U.S. would make less than $35,350 after deductions. Perhaps the PC police think it's more polite to lump everyone into a middle class. Simpler to just say the 99%.
The reason I ask is that a significant income can be derived from investments by anyone who isn't living paycheque to paycheque, even if it's just a retirement savings that reinvests earnings. And even then, I would venture that many people who are living paycheque to paycheque are in need of a reality check on the lifestyle their salaries can support.
To AngrieCommie's (Edit: whoops, Eppie's) original point, here in Canada we have an investment vehicle (they call it a "Tax-Free Savings Account" or TFSA) which allows for investment income to not be taxed at all. Granted, there is a limit to what you can contribute and withdraw from the TFSA, but in my experience it's been a fairly popular policy across most of the population, including myself. A lower tax rate on investment income, capped or progressive instead of flat, isn't necessarily a Rich-first policy. In my opinion it can provide significant benefit both at the individual and economy-wide levels.