[Myrddin]

The super rich pay little in taxes because they have little earned income. Most of it is passive income from dividends, rentals, interest bearing accounts and equity appreciation in stock. If they have earned income, they usually have enough losses in their passive income to counter anything they might owe. Passive income is not subject to payroll withholding taxes e.g. FICA, Medicare. Assets held over a year get capital gains tax rates of 15% for net gains.

[SAJ]

''Capital gains'' are dollars that have already been taxed at least twice, with (sometimes) the exception of inherited property. Taxing them again, at all, is the investment version of a VAT, no more and no less.

No, I did not have any cap gains on my tax return, due to Section 1256 (formulated and rammed through the Regress in 1986 by none other than Dan Rostenkowski (D) Caponeville.)

[rabscuttle385]

See comment # 69, or below:

...the federal financial aid system for students penalizes "high" income. A family of four in Manhattan with $5 million in property and cash on hand but zero income (just living off the accumulated cash) will get Pell grants while a family in Northern Virginia with both parents working, making $150,000 annually, will get slapped with student loans.

IMHO, the folks with money already find ways to hang on to their money. The income tax penalizes folks who try to move up the social ladder, and the college financial aid system penalizes kids who attempt to work their way through college or attempt to avoid debt in college.