Big Gap Found in Taxation of Wages and Investments

[54anickel]

http://www.nytimes.com/2004/05/08/business/08tax.html?ex=1084593600&en=f03d71190d3e9724&ei=5062&partner=GOOGLE

ASHINGTON, May 7 - Americans are being taxed more than twice as heavily on earnings from work as they are on investment income, even though more than half of all investment income goes to the wealthiest 5 percent of taxpayers, a new study has estimated.

The study, which applied the most current tax laws to a database of 186,000 tax returns, found that federal income taxes on wages and other earnings average about 10.7 percent and that payroll taxes for Medicare and Social Security take another 12.7 percent. By contrast, federal taxes on investment income average about 9.6 percent.

The study was produced by Citizens for Tax Justice, a liberal nonprofit research organization that has criticized tax breaks for corporations and the wealthy. Extrapolating from data supplied by the Internal Revenue Service, the study estimated that 43 percent of all investment income goes to the wealthiest 1 percent of households and 60 percent goes to the top 5 percent.

"The huge disparity in taxation between earnings and investment income should shock average American taxpayers," said Robert S. McIntyre, director of Citizens for Tax Justice. Tax experts said the calculations conformed with their own sense of the current tax code. The centerpiece of President Bush's last big tax package was a provision that halved taxes on stock dividends and reduced the top tax rate on capital gains to 15 percent, from 20 percent.

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[Frodo]

1. Found? I thought it was the stated plan?

"double taxation" and all that.