Quote:
Originally Posted by Casey2296
Here's a scenario where it would also apply.
Let's say an immigrant family came to NY 40 years ago with nothing, started a small business, say a restaurant, grocery, hardware store etc. spent their working lives not paying themselves a whole bunch, sacrificing days off, vacations, etc. raising a couple of kids who they want to leave a better life to than they had.
Now they're ready to retire. So they post their small business for sale and find a buyer that nets them just over a million dollars. Finally, a reward for 40 years of keeping your nose clean, working hard, being a part of your community, etc.
Some folks would call that the "American Dream".
With the proposed tax increase, which would put the rate at the highest in the world, and New York's current tax rate, that immigrant family would pay almost $600,000 to the State & Feds in taxes on that million dollar gain. Leaving them just over $400,000 for their retirement. Hardly the rich folks people love to hate.
The government also has a funny way of working that million dollar limit down over the years until it affects more and more people. Aka coming soon to a tax bracket near you.
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The highest rate someone is taxed at does not apply to every dollar earned. It applies to the amount above a certain level. In this case, if capital gains are taxed at the same rate as a person's earnings, then the amount earned above $1 million would be taxed at around 40% while the amount below would be taxed at the lower rates used for the different tax brackets currently in effect so the amount they paid in taxes would be considerably less than the $600,000 you indicate. Also, it's not like they would be going from paying nothing in taxes to whatever the total amount they would pay under any new tax law is, but that seems to be what you are implying.