# Do the rich pay their fair share? **URL:** \ **Category:** Great Debates\ **Created:** [September 29, 2020, 3:25pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817 "2020-09-29T15:25:51Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Wrenching\_Spanners](https://avatars.discourse-cdn.com/v4/letter/w/ecb155/32.png) [@Wrenching\_Spanners](https://boards.straightdope.com/u/Wrenching_Spanners)\ **Post date:** [October 2, 2020, 6:43pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/61 "2020-10-02T18:43:18Z")
You are defining income as wages. To be slightly more accurate, the term is ordinary income. I’m defining income as money coming in, whether actual cash balances or unrealised gains. As noted in a separate post, I’m basing my terminology on general financial/accounting terms including those used by Investopedia commentators. > The IRS separates taxable income into two main categories: “ordinary income” and “realized capital gain.” Ordinary income includes earned wages, rental income, and interest income on loans, CDs, and bonds (except for municipal bonds). A realized capital gain is the money from the sale of a capital asset (stock, real estate) at a price higher than the one you paid for it. If your asset goes up in price but you do not sell it, you have not “realized” your capital gain and therefore owe no tax. > **[Income Tax vs. Capital Gains Tax: Differences](https://www.investopedia.com/ask/answers/052015/what-difference-between-income-tax-and-capital-gains-tax.asp#:~:text=An%20individual%20must%20pay%20taxes,for%20one%20year%20or%20less)** > > Income tax is paid on income earned from wages, interest, dividends, and royalties, while capital gains tax is paid on profits from selling an asset. And while I’m certainly not going to dig through the US tax code, I’ll note that on Schedule D, the IRS form for calculating capital gains taxes, line 47 identifies capital gains as income. > Tax on all taxable income (including capital gains and qualified dividends). > [https://www.irs.gov/pub/irs-pdf/i1040sd.pdf](https://www.irs.gov/pub/irs-pdf/i1040sd.pdf) (PDF, p.D-17) And yes, of course, long-term capital gains are taxed differently than wages, aka ordinary income. As for your third question, I’ve already answered it. > [@Little\_Nemo](#): > > Are there good reasons for taxing capital gains at lower percentages than income? > Lower capital gains tax rates are a bit trickier since they’re meant to encourage investment and ultimately increase the amount of tax by having a larger pool of income to tax from. That seems to have worked for when the long-term capital gains rate was set at 20%, but not from when it was changed to 15%. Law of diminishing returns, I expect. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [October 2, 2020, 6:57pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/62 "2020-10-02T18:57:36Z")
Agreed, in that if we don’t need the taxes, as we are doing fine financially, then we should keep taxes low. But, we should not be borrowing against our children’s future to lower the taxes of the wealthy now. As far as how I would feel about paying that much? It’s not inconceivable that I will be in that position, many billionaires have started from where I am now. And, making hundreds of millions of dollars a year would be kinda cool, I wouldn’t turn it down if it works out that way. But, if I knew that the top marginal rate was 90%, that wouldn’t change a thing of what I’m doing. Making hundreds of millions and taking home tens of millions would be acceptable to me. I’m sure that if I were to be in that position, then I wouldn’t mind keeping more of my money, to buy yachts and mansions and hookers and blow, but that doesn’t mean that I should. There aren’t many who actually _make_ that kind of money. At that point, if I were making that much, then other people would be making the money for me, and I would just be collecting from them. I think I would be able to console myself when I write out a check for 90 million to the IRS that I am keeping 10 million for myself. And, to the other point, I see high taxes as a disincentive to pay yourself a whole bunch. Right now, I don’t pay myself all that much, because the more I can keep in my business, the faster it grows. But, if it is at the point where it doesn’t actually need any further input of my labor, and instead, all it needs is me to keep cashing the checks that I write myself, then I have less incentive to continue to reinvest my profits into my business. If I have to pay 90% tax on money that I extract, then I have more of an incentive to leave it in there, to go to my employees and to my clients, growing that equity, rather than to my own use. So, rather than take out 500 million so that I can buy a third and fourth mansion with matching yacht with my remaining 50, maybe I only take out 200 million, giving me 20 million to play with, and leaving more in the business. And yeah, that creates some forms of tax avoidance schemes. But, you know what one of the biggest tax avoidance schemes was? The Christmas bonus. At the end of the year, the owners would see how much they had profited, and to avoid paying taxes on those profits, they would instead give it to their employees. Most companies don’t do this anymore, and that is specifically because they only have to pay 20% or less on the money that they take, the profit that is left over, rather than 90%. Many other tax avoidance schemes did certainly reduce the revenue that was generated by taxing the ultra wealthy, but most of them ended up doing things like paying people more, or setting up trusts for charitable work, or even planting avocado trees. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [October 2, 2020, 7:21pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/63 "2020-10-02T19:21:56Z")
> [@Wrenching\_Spanners](#): > > I’m defining income as money coming in, whether actual cash balances or unrealised gains. But that’s not how the IRS defines it. From your own cite, that you quoted. > [@](#): > > If your asset goes up in price but you do not sell it, you have not “realized” your capital gain and therefore owe no tax. So, your contention that your terminology is based on Investopedia commentators is incorrect, as they specifically say that there are two income categories, ordinary income and realized capital gains. You are saying that unrealized capital gains are also a part of income, which is not supported, and is in fact contradicted by what you have chosen to cite. > [@Wrenching\_Spanners](#): > > And while I’m certainly not going to dig through the US tax code, I’ll note that on Schedule D, the IRS form for calculating capital gains taxes, line 47 identifies capital gains as income. Please tell me what line unrealized capital gains go on. In any case, you do see all the math involved, and then where you put the _lower_ of the numbers onto that line, that decreases your taxable income on _realized_ gains substantially, making them, while still income, taxed entirely differently than income that comes from work. To the part of your need for pedanticism that is actually slightly correct, you still notice that the IRS calls one ordinary income, and the other realized capital gains, meaning that when most people speak of income, they would be talking about what the IRS defines as ordinary income. Sure, they are both income, but even the cite that you used to try to say that so was unrealized capital gains also makes the same mistake you are accusing posters of, when the title of it says “Income Tax Vs. Capital Gains Tax”, then goes on to define income tax and capital gains tax. So, pretty much everyone, including your site, considers income tax and capital gains tax to not be the same thing. That they both end up occasionally being referred to as ‘income’ by the IRS on a single line does not mean that everyone is wrong when they discuss the two different sources of income as though they were very different. ---
**Author:** ![Wrenching\_Spanners](https://avatars.discourse-cdn.com/v4/letter/w/ecb155/32.png) [@Wrenching\_Spanners](https://boards.straightdope.com/u/Wrenching_Spanners)\ **Post date:** [October 2, 2020, 7:44pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/64 "2020-10-02T19:44:19Z")
> [@k9bfriender](#): > > But they can do that off of their realized gains from the investments that they make with that loaned money, or even with a new loan collateralized against the investments that they made. > > Let’s say I have an asset that is worth $1,000,000, that I originally purchased for $500,000 ten years ago(which is a 7.5% rate of return, not too amazing, as just putting it into an S&P 500 index fund should get you close to 10%). I can use that asset as collateral to borrow probably 75% of that as a ten year 1-2% interest loan, so I now have $750,000 to play with. I keep about $100,000 to pay the interest, $150,000 for personal use, and invest $500,000 into an asset or index fund that, over the next 10 years, grows to $1,000,000. I can now borrow $750,000 against that new asset, pay off the previous loan, and also borrow another $750,000 to buy more index funds. In your scheme, you have bankers issuing low-interest loans based on marketable assets that represent a significant portion of the borrowers wealth, rather than investing in the marketable assets themselves. That means the bankers are transferring risks from their borrowers to themselves for a pittance. Bankers generally don’t do that - most of the time they’re greedy, not stupid. (I realise the US pre-2008 mortgage bubble is an obvious counter-example.) A more realistic hypothetical example would be a person with $100 million in asset-based wealth borrowing $10 million with $10 million or more as collateral. That first loan is hypothetically realistic. However, once the first $10 million is gone, there needs to be a rollover loan. So $10 million to pay off the first loan and $10 million for the next year - $20 million. Let’s assume that gets approved because the asset value has appreciated 10%. The next year the loan size is $30 million. It’s not far different from a Ponzi scheme, and pretty early on the bank is going to stop the rollover loans. What’s more, the collateral has to maintain its value. That’s fine in a constantly upward market. If the economy has a stumble? The bank will require that collateral is topped up. Otherwise the loan is due immediately and the bank is going after the borrowers assets. I realise I’m substituting one hypothetical scenario for another, but I’m also aware that in the real world banks are obsessed with trying to quantify their risks and protect against downsides. Do you have an example of an actual borrowing-based asset management scheme as described in your post? ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [October 2, 2020, 7:56pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/65 "2020-10-02T19:56:53Z")
> [@Wrenching\_Spanners](#): > > In your scheme, you have bankers issuing low-interest loans based on marketable assets that represent a significant portion of the borrowers wealth, I never said a significant portion of a borrowers wealth. If we are talking about someone with a net wealth of around a million dollars, they are well off, but not rich. > [@Wrenching\_Spanners](#): > > That means the bankers are transferring risks from their borrowers to themselves for a pittance. No they are not. They are transferring the risk to the tax payer who will bail them out, and profiting in the meantime. > [@Wrenching\_Spanners](#): > > (I realise the US pre-2008 mortgage bubble is an obvious counter-example.) Nothing has changed there. Credit default swaps and all that are still going on. > [@Wrenching\_Spanners](#): > > A more realistic hypothetical example would be a person with $100 million in asset-based wealth borrowing $10 million with $10 million or more as collateral. That first loan is hypothetically realistic. They can borrow more than that. I mean, for instance, when I bought a house, I had about 20% the value of the house on hand, and the bank gave me the rest. The house is worth a bit less than twice what I bought it for now. > [@Wrenching\_Spanners](#): > > However, once the first $10 million is gone, there needs to be a rollover loan. What do you mean gone? As in spent with nothing to show for it? > [@Wrenching\_Spanners](#): > > So $10 million to pay off the first loan and $10 million for the next year - $20 million. Let’s assume that gets approved because the asset value has appreciated 10%. The next year the loan size is $30 million. It’s not far different from a Ponzi scheme, and pretty early on the bank is going to stop the rollover loans. None of what you just said makes any sense or is related to what I was talking about. > [@Wrenching\_Spanners](#): > > What’s more, the collateral has to maintain its value. That’s fine in a constantly upward market. If the economy has a stumble? The bank will require that collateral is topped up. Otherwise the loan is due immediately and the bank is going after the borrowers assets. Yeah, people that are overextended are in constant fear of a margin call. But such people do exist. > [@Wrenching\_Spanners](#): > > I realise I’m substituting one hypothetical scenario for another, but I’m also aware that in the real world banks are obsessed with trying to quantify their risks and protect against downsides. Agreed, but that doesn’t conflict with what I said at all. > [@Wrenching\_Spanners](#): > > Do you have an example of an actual borrowing-based asset management scheme as described in your post? Anything in the real estate market. Anyone who does commodities or stock speculation on margin. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 2, 2020, 7:58pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/66 "2020-10-02T19:58:01Z")
> [@Dark\_Sponge](#): > > I was talking about taxes in general but my point was how much do dopers feel is enough? I feel we should collect enough in taxes to pay for the amount we spend. Right now, we’re deeply in debt so we should actually be collecting more than we spend so we can start paying off the amount we’ve spent in the past. > [@Dark\_Sponge](#): > > Should the tax rate keep increasing the wealthier a person gets or should there be an upper limit? I feel we should abolish the artificial divide between income and capital gains. Money made from capital gains should just be treated as income and taxed at the same rates as any other income. As a general rule, I feel the wealthy should pay a share of taxes that is proportionate to their share of wealth. If the wealthiest one percent own 38.5% of the country’s wealth then they should be paying around 38.5% of the country’s taxes. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 2, 2020, 8:04pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/67 "2020-10-02T20:04:09Z")
> [@Wrenching\_Spanners](#): > > You are defining income as wages. To be slightly more accurate, the term is ordinary income. I’m defining income as money coming in, whether actual cash balances or unrealised gains. As noted in a separate post, I’m basing my terminology on general financial/accounting terms including those used by Investopedia commentators. This is a discussion specifically about tax rates. So this is a not a place where you can legitimately refer to capital gains as income because they have two different sets of tax rates. I can assure you that if the IRS tried to tell somebody their capital gains were income and then tried to tax those capital gains as income, a team of tax lawyers would quickly step in and declare that capital gains are not income. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 2, 2020, 8:08pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/68 "2020-10-02T20:08:04Z")
> [@k9bfriender](#): > > I do think that if you have an asset for 10 or more years, then it should be taxed at a different rate than other assets or income. 20 years an even better rate. This encourages long term investments. Okay. So now explain why we should favor long term investment in this manner. Should we be encouraging other forms of long term economic transactions? Should we, for example, reduce the income tax rate for any employees who have held the same job for ten years? ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [October 2, 2020, 8:37pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/69 "2020-10-02T20:37:23Z")
Because the alternative is to not encourage long term investments, in which case, people have no incentive to see a company grow, and would rather go for short term gains. It’s this whole race to the bottom line, rather than building of equity that has been a large part of driving our country into the shitter, pretty much since we changed capital gains down to only 1 year for long term capital gains. > [@Little\_Nemo](#): > > Should we, for example, reduce the income tax rate for any employees who have held the same job for ten years? No, but, most companies do appreciate an employee that has worked for them for ten years, and they get more money and more benefits than someone who has not worked as long. ---
**Author:** ![Kearsen1](https://avatars.discourse-cdn.com/v4/letter/k/3d9bf3/32.png) [@Kearsen1](https://boards.straightdope.com/u/Kearsen1)\ **Post date:** [October 2, 2020, 8:39pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/70 "2020-10-02T20:39:27Z")
I think the government is always growing, never shrinking. And it doesn’t need to be as big as it is. I think people should first agree on the size and scope that government needs to be and then decide what the tax rate is. Currently we have tax and spend Democrats, and we have non tax and spend Republicans. Both piss me off but one hurts my pocket book more, the other hurts my kids. (or theirs) ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [October 2, 2020, 8:46pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/71 "2020-10-02T20:46:47Z")
Okay, then name specific programs that you want cut and by how much. Of course the government is always growing, as is our population and our economy. The money spent by the government is not wasted, that is money that goes to workers and employees and citizens who then buy things in the private market. If we want to start getting rid of no-bid or costs plus contracts, and have private companies actually compete to have access to government contracts, then I can see that, as a substantial amount of the money from those contracts goes straight into the pockets of the wealthy. That’s my suggestion, and that might shave off a percent or so of the budget. What, specifically, are you suggesting that we cut? Do you want to start with the military? How about the police? > **[Here's how two federal programs helped expand police funding by over 200%...](https://www.cnbc.com/2020/06/25/two-federal-programs-helped-expand-police-funding-by-over-200percent.html)** > > The killing of George Floyd has sparked a movement to defund the police. Despite a sharp decline in crime rates since the early 1990s, the United States is spending more on policing than ever, about $143 billion in 2015 alone. > [@](#): > > In 1980, police spending was just around $47 billion adjusted for inflation, but by 2015, spending skyrocketed to almost $143 billion, an increase of more than 200%. > > All three levels of government — federal, state and local — contribute to the cost of police protection. But their contributions are far from equal. In 2015, local governments paid for more than two-thirds of police spending. The federal government came second at 20.4%, followed by state governments at 11%. > > Out of the three levels of government, federal spending has seen the fastest rate of growth. Between 1982 and 2015, federal spending increased by 354%, faster than both local and state spending combined. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 2, 2020, 8:56pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/72 "2020-10-02T20:56:51Z")
> [@k9bfriender](#): > > Because the alternative is to not encourage long term investments, in which case, people have no incentive to see a company grow, and would rather go for short term gains. Isn’t the value of the company supposed to be the incentive to invest in it? If the government is enacted laws which bias where people invest their money by putting different tax rates on different investments isn’t it interfering with the natural workings of the free market? People should be free to choose to make short term or long term investments based on where they feel their money is best placed not on where the government things they should be investing. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 2, 2020, 9:03pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/73 "2020-10-02T21:03:19Z")
> [@k9bfriender](#): > > No, but, most companies do appreciate an employee that has worked for them for ten years, and they get more money and more benefits than someone who has not worked as long. But we’re talking about government policy here. Why should the government incentivize one type of economic benefit and not the other? Why does long term investment get encouraged by a favorable tax policy and long term employment does not? ---
**Author:** ![Wrenching\_Spanners](https://avatars.discourse-cdn.com/v4/letter/w/ecb155/32.png) [@Wrenching\_Spanners](https://boards.straightdope.com/u/Wrenching_Spanners)\ **Post date:** [October 2, 2020, 9:57pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/74 "2020-10-02T21:57:20Z")
Seriously? This discussion is based on a comment from Tripolar in post #27 that wealth gains are not based solely on income. I’ve explained that wealth gains are based on income and that there are are different forms of income, which can be categorised as 1) straightforward income, i.e. wages, aka ordinary income; 2) short-term realised capital gains, 3) long-term realised capital gains, and 4) unrealised capital gains. I’ve provide cites that both a mainstream financial information website Investopedia considers capital gains as income: > Capital gains tax is paid on income that derives from the sale or exchange of an asset such as a stock or property that’s categorized as a capital asset. and the IRS considers capital gains as income: > Tax on all taxable income (including capital gains and qualified dividends). > [https://www.irs.gov/pub/irs-pdf/i1040sd.pdf](https://www.irs.gov/pub/irs-pdf/i1040sd.pdf) (PDF, p.D-17) And your argument is that some people consider ordinary income to be the accepted definition of income? I’ll leave that up to you, but I think I’ll side with the people with more in-depth knowledge. Also, I notice you’re trying to obscure the premise that capital gains are income by saying that the IRS doesn’t recognise unrealised capital gains income as taxable income, a point that was made in post #42. If you’d like to explain why you don’t believe wealth gains through unrealised capital gains should be categorised as income, feel free. It will work against your premise that those gains should be taxed, but please do try to work past that contradiction. ---
**Author:** ![Wrenching\_Spanners](https://avatars.discourse-cdn.com/v4/letter/w/ecb155/32.png) [@Wrenching\_Spanners](https://boards.straightdope.com/u/Wrenching_Spanners)\ **Post date:** [October 2, 2020, 10:09pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/75 "2020-10-02T22:09:12Z")
So what are you actually discussing? I’m assuming you’re talking about wealth asset managers, the financial advisors who have multi-millionaire clients, and the practices they take to establish their client’s income streams. Please provide me with an actual example of a wealth-management client who is deriving their income mainly based on loans against their appreciating assets. It certainly can happen in the short-term. Anything past the short-term, and the client is going to be bankrupt, something wealth asset managers hpoe to avoid for their clients. ---
**Author:** ![Wrenching\_Spanners](https://avatars.discourse-cdn.com/v4/letter/w/ecb155/32.png) [@Wrenching\_Spanners](https://boards.straightdope.com/u/Wrenching_Spanners)\ **Post date:** [October 2, 2020, 10:16pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/76 "2020-10-02T22:16:51Z")
So there’s a great business that I’d like to invest in, and they’d like an investment of $100 million. If I invest in them, and I make a pre-tax 50% profit, I get to take home $5 million? That’s not much incentive over investing in Treasury Bonds which have essentially zero risk. Or I can just choose to leave my investment in the business forever. That’s not investment, that’s charity. By the way, would by investment that I can’t profitably take advantage of be subject to a wealth tax? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [October 2, 2020, 10:26pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/77 "2020-10-02T22:26:04Z")
I don’t understand your math; wouldn’t a 50% return on a $100 million investment get you $50 million not $5 million? ---
**Author:** ![beowulff](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/beowulff/32/542_2.png) [@beowulff](https://boards.straightdope.com/u/beowulff)\ **Post date:** [October 2, 2020, 10:26pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/78 "2020-10-02T22:26:54Z")
Not when it’s taxed at 90% ---
**Author:** ![Wrenching\_Spanners](https://avatars.discourse-cdn.com/v4/letter/w/ecb155/32.png) [@Wrenching\_Spanners](https://boards.straightdope.com/u/Wrenching_Spanners)\ **Post date:** [October 2, 2020, 10:32pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/79 "2020-10-02T22:32:01Z")
The IRS would happily and easily define capital gains as one subset of income and ordinary income as a different subset of income and laugh at any tax-avoiders who tried to hire tax lawyers to tell them they were wrong. As noted in other posts, they officially on the Schedule D tax form identify realised capital gains as a form of income. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [October 2, 2020, 11:06pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/80 "2020-10-02T23:06:07Z")
Then why don’t people pay income taxes on capital gains? [Previous page](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817.md?page=3) [Next page](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817.md?page=5)