Who do you think makes the decision regarding the way the government will collect its money? Ans: The people with 100 million dollars or more. They pay to elect their Senator and Congressional Rep who will create the laws they are instructed to create.
So, when the wealthy told the politicians who should pay the money to operate the government, what did they decide? Ans: People who worked for a living. People who had incomes. A tax on "income".
The very thing the truly wealthy did not have unless they choose to have an income.
And, the usual way wealthy have to pay tax is when they sell an asset, such as stock. Now there are two things to know about that:
1. Why would an ultra wealthy person sell stock? Ans: To take advantage of an opportunity for that money to make an even greater annual return than it is currently making.
2. That is still not taxed as income. It is taxed as a long term capital gain. With a maximmum tax rate of 20%.
So, their money is moved from one asset to an even better asset, and they are only taxed at a flat tax of 20% on the profit when the asset is sold before it is invested into the better investment. And of course, they only do this if the proposed new investment is so much better than the way the money is currently invested, that it is going to make overwhelming financial profit after the 20% tax is paid (in other words, this is all by choice - unlike the income tax paid by the workers).
