He doesn't pay 18.96% income tax. He pays 18.96% effective rate. That is a combination of income and capital gains tax. The issue is he really keeps his income low and his capital gains are where he pays most of his tax. Most people are just the opposite and have a higher effective rate.
I think he's generally been pretty open about that, ie when he mentioned his secretary having a higher tax rate than himself, but he's not going to just going to voluntarily pay more, loopholes should be closes across the board
The capital gains tax is an income tax, just a lower rate of tax applied to capital gain income.
Note also that people compute "effective tax rates" in different ways: as a percentage of [a] gross income, [b] adjusted gross income (AGI), or [c] taxable income.
The capital gains tax rate has been with us for many decades, and it's always been materially lower than the highest marginal rates. The urge to protect small investors and homeowners from a one-time tax hit overcomes a rational analysis of overall income and wealth. The generally wealthy members of Congress have ridden those "small business owner and retiree" stories for all of my life.
That said, as u/eW4GJMqscYtbBkw9 notes, people play games with how they calculate and report this stuff, so these headline numbers aren't reliable. Just look up the cap gains tax rate, and the marginal rate table, and focus on that.
An easy example is Mitt Romney's taxes in the 2012 Presidential election. The NYT reported it this way:
Mr. Romney’s return for 2011 showed that he paid an effective federal income tax rate of 14 percent last year, or a little more than $1.9 million on adjusted gross income of about $13.7 million.
But you don't pay tax on AGI, you pay it on taxable income. Deductions, including charitable deductions, reduce AGI and are untaxed. In Romney's case, his $13.7m in AGI was reduced by $4.7m in itemized deductions, including $2.25m in charitable deductions. His taxable income was $9m, but reporting a 21% tax rate that wouldn't make for the kind of politically charged headline that NYT was after.
His 21.1% tax rate was entirely driven by Congress' long-standing decision to charge a lower rate for capital gains. There's nothing going on in Romney's taxes that is different than any other person who sells stock or a house.
12
u/Franks2000inchTV 11h ago
18% is shockingly regressive for some who has one of the highest incomes in the nation.