Special capital gains rates are exactly how the wealthiest of the wealthy manage to pay the lowest percentage of taxes. Because their income is mostly from capital gains. So the guy that works a job at shop pays 35% and a billionaire pays 15%. All that is being done now is some of this is coming in line with everyone else that actually earns money working
Not exactly. Say you have two people. One person who makes $250,000/yr and one that makes $50,000/yr. The person paying $250,000/yr pays about 30% of his $250,000 ($75,000) in taxes while the person making $50,000/yr pays about 15% ($7,500) in taxes.
But say the guy who made $250,000, instead of buying a sports car or travel, saves $200,000 and puts it into an investment (like a stock) that grows in value another 10% the following year ($20,000). Because that is income, he has to pay capital gains tax on that amount ($20,000). If he made no money the following year, then his total tax rate would be 15% based solely on the income of the increase of his investment. Very rich people who have huge investments get a majority of their income from these investments so the majority of their tax rate is based on their capital gains tax rate.
He already paid 30% on the initial $200,000 he invested so would it be fair to paid another 30% on the amount he earned in interest? Furthermore, why punish the guy for doing the right thing and saving that money for retirement or a rainy day so that he won't need to live off of government aid in the future. A higher tax would only incentivise him to just spend all of his money instead of throwing it away in taxes. Plus, his $200,000, if invested in stocks or bonds is helping infuse money back into our own companies that could use the capital to grow and expand our economy.
If someone is paying capital gains tax it's a good thing. It means:
1) He's already made a ton of money and paid a ton of taxes at a higher tax rate (30% or so) on that money he earned.
2) He's invested it somewhere where it has been infused back into our economy, like a stock or bond.