Ok... you do realize most wealthy take advantage of passive income, right? And that since most super wealth comes from investment, as opposed to earned wages, they pay at a lower capital gains rate (0%, 15%, 20%), than the higher income tax rate, right? For example, you earn $2 million this year, you pay the higher end of income tax. You earn that in investments, you pay 20% or lower.
Most wealthy own stock, when that stock is sold, they pay the same capital gains tax on that sale. But, what happens if they don’t sale the stock, accumulating wealth yearly through stock, but not sale of stock? They often also liquidate stock for living expenses, but that is a smaller tax. Stock is taxed, but at a lesser rate than income tax.
Most lower income folks also down what they make. Which also factors in SSI, Medicare and etc. If I’m super rich, I can go years without employment, and use my losses throughout that time to offset my taxes. The avoidance of taxes through losses is how Trump spent years not paying any taxes. (He stated this himself) Offsetting future income against current losses. Add in interest payment deduction, depreciation and business expense, then he probably earned through loss.
To clarify, most of the super wealth you speak of comes from dividends and capital gains, taxed at lower rates. And there is absolutely nothing illegal in that. These are only a few examples. And I tried to simplify so that I wouldn’t be blamed for using “big words” lol. We could go a lot deeper, but it would be pointless with you.
