If you work for a living, America taxes you at double the rate of wealthy investors with “unearned income”
Taxing workers more than investors is fair, conservatives also argue, because investors and workers are really the same people at different stages of their lives. When you’re young, you save and pay high tax rates on your wages. When you’re old, you get to enjoy the lightly taxed proceeds of that invested income. The wrench in these arguments is the massive jump in inherited American wealth—driven by rising income inequality and loose tax laws. In practice, the person who successfully accumulates assets is often not the person who spends them. Affluent retirees are increasingly reluctant to even touch their nest eggs. A huge and disproportionate share of the nation’s largest fortunes is in the hands of people in their 80s and 90s. And the estate tax, already very easy for the wealthy to avoid, is targeted for elimination by the Trump administration. As a result, an unprecedented amount of wealth may soon be inherited. The generation on the receiving end of this familial largesse will get a tax break every time they cash in on the fruits of others’ labor.
Why American Workers Pay Twice as Much in Taxes as Wealthy Investors [Ben Steverman/Bloomberg]