Quote:
Originally Posted by BobC
As an earlier poster, Jayshum, accurately pointed out, individuals are subject to graduated federal tax rates or tax brackets. You don't end up paying the highest possible rate on every single dollar of taxable income that you earn. At least not under current federal tax law, and I doubt such a new tax law allowing that to happen would ever be passed.
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My concern with that is the brackets come down over time, while rates generally go up. Adjusted for inflation, when the income tax was introduced, the top bracket was 7% on incomes above $12.9 million. Now it's 37% on everything above $500,000. Four years after the tax started, the top rate was 67%, and with the exception of a few years in the 1920s, it stayed above 60% (and often above 70/80/90%) until the late 1980s. Since then it's been going back up, with occasional cuts never sending it back down as low as it was before. If someone is smart enough to build a successful business from scratch, they're probably also smart enough to look at that trend, then find the Cayman Islands on a map, as Sir John Templeton did.