> The capital gains rate is the source of our most gruesome wealth inequality. It's absurd that Mitt Romney pays half my effective tax rate on 200 times my income. The justification for low capital gains rates is "double taxation" due to corporate income tax. Abolishing corporate income tax eliminates that.
The lower capital gains tax rate leads to income tax inequality, but I doubt it significantly changes wealth inequality. In CA, top long term bracket is 37%, top ordinary is 54%. That 17% jump will reduce dividend compounding a bit (by 17 bp or so) and require withdrawing 20% more portfolio [if at zero basis] to cover expenses -- but when you have $1B, neither change fundamentally changes your lifestyle.
And don't forget that cap gains tax can be avoided or lowered in all sorts of ways (step-up on death, donations, gifts, tax advantaged accounts, etc.) You also have business owners subject to QSBS getting no federal cap gains taxes.
The lower capital gains tax rate leads to income tax inequality, but I doubt it significantly changes wealth inequality. In CA, top long term bracket is 37%, top ordinary is 54%. That 17% jump will reduce dividend compounding a bit (by 17 bp or so) and require withdrawing 20% more portfolio [if at zero basis] to cover expenses -- but when you have $1B, neither change fundamentally changes your lifestyle.
And don't forget that cap gains tax can be avoided or lowered in all sorts of ways (step-up on death, donations, gifts, tax advantaged accounts, etc.) You also have business owners subject to QSBS getting no federal cap gains taxes.