Thursday, February 25, 2016

A Tale of Two Dollars

At the top we see a construction foreman. He works hard, and earns about $70,000/year. His wife also works, as an elementary school teacher, and earns about $40,000/year. They have one child. Together they earn about $110,000/year - at the 80%-ile of household incomes, which makes them upper middle class.
That dollar? It's taxed at 25%.

Below this fellow is his twin brother, who plays the stock market. He earns about $210,000/year. His wife doesn't work - she's a stay-at-home mom. They also have one kid. Their household income is that $210,000 - 95%-ile of household incomes: upper-upper middle class.
His dollar?
As "capital gains", it's taxed at 15%.

This is NOT an income tax.
It's a tax on labor!

Here's a graphical representation.
The lower dollar is the one earned.
The middle dollar is the one taken home by the player in the stock market.
The upper dollar is the one taken home by the construction foreman.

No comments:

Post a Comment