Taxation of Carried Interest
The correct solution to this problem is to abolish the distinction between capital gains and ordinary income (ie wages), and abolish the corporate income tax that justifies the &quot;double taxation&quot; argument that justifies the capital gains rate.<p>Capital gains is why Mitt Romney can make 200 times as much as I do in a year, and pay half my effective tax rate. This is broad across the economy. It&#x27;s a fundamentally immoral tax model. Moreover, it&#x27;s a socially dangerous one - the idea that there is one set of rules for the rich and another for everyone else is already stressing our nation. Stop actually proving the point, lest you want a revolution to deal with it when society lacks the nerve.<p>Corporate income tax is no big loss. For one thing, it&#x27;s an increasingly shrinking part of our tax base. For another, it&#x27;s riddled with loopholes and borderline graft, much more so than individual taxes. This kind of stuff is biased against entrepreneurship, in favor of cozy relationships with politicians. Being connected is more important than being hardworking or imaginative.<p>Tax capital gains as ordinary income. It&#x27;s simple and fair.