Quote:
Originally Posted by PeterG
Actually, that's kind of the way our federal tax system works today, or at least we're halfway there. Capital gains on the business you've implied are only 24%, and way less than that if it's QSBS eligible. That's why Warren Buffet pays a lower tax rate than his secretary.
I leave it to others to opine on whether this is appropriate.
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Unfortunately, the capital gains tax rate doesn't apply to LLPs, where income passes through to the partners. I wish it did. To answer your question, I think it's appropriate. In my business, my capital is used to create income (and jobs). In exchange for this risk, a lower tax rate seems appropriate. Earning a profit isn't a given outcome. I could lose my capital. In exchange for the risk of investing capital, a lower tax rate seems reasonable.