So, selling your stocks and paying 25% on income makes more sense than holding a winner and paying 20% Capital gains... ?
Am I suddenly bad at math?
Seriously, what am I missing?
It seems to me there is a small band of crossover where the rate on regular income comes down, but the capital gains rate goes up. It would absolutely depend on the individual financial situation, but there does appear to be a narrow set of folks who could pay more.
An example would be those single folks, making more than 150k, but less than 189k, and who’s qualified, non tax deferred, capital gains are roughly 38% or more of their annual income. Even among those with significant portfolios such a situation is rare, not impossible, but rare. A similar narrow band of married folks, making between 300k and 454k, who’s capital gains account for more than 72% of their income could also be found. Far from impossible, but also extremely rare.
Perhaps the numbers could be tweaked to eliminate these bands. My first gut take is that if I crunched the numbers a little deeper the reduction in rates for the lower tiers would further narrow these bands.
That said, the situation posited by the author still makes little sense to me.
Am I suddenly bad at math?
Seriously, what am I missing?
I believe what he's saying is that selling the stock and paying a ONE TIME income tax and then investing the money into a non taxed vehicle to snowball is better than paying a percentage tax on the dividends every year (if you make over 150k).
Exactly. The whining whiners will always boohoo over maybe 1,000 single filers at some get rich quick startups rather than paying attention to the millions and millions of regular hardworking people who benefit.
Trump’s plan isn’t gonna keep anyone from becoming rich if they apply themselves.