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Financial Planning > Tax Planning > Tax Reform

The most important tax break is the one that nobody talks about

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If Congress and the president really want to get serious about tax reform and cutting the federal deficit, perhaps they should look at raising the tax rate on investment income, or income that is earned from capital gains (profits from the sale of assets) or dividends (cash from corporations to shareholders). Today, investment income is taxed mostly at a maximum of 15 percent whereas ordinary income from working wages is taxed at 37.9 percent, if you include the Medicare payroll tax. But the battle over whether to increase the tax on investment income is expected to be contentious, since Republicans don’t want to upset the super-rich that benefit most from that low tax rate while Democrats want to avoid upsetting the hedge fund establishment.