Paying taxes has always been a daunting thing for most people to do.
Indian employees with normal jobs across almost all industries pay up to 30% of their income as taxes every year. Across the US, this number even rises to 35%.
But on the other hand, people in the higher income brackets or rich classes of people don’t pay taxes at all.
But why?
You see, most rich people make their money from investments. Be it real estate or stock markets, the investments are usually termed capital gains. And guess what? The taxes for the capital gains, in the long run, is just 20%.
Elon Musk has a net worth of $190 billion. However, this money is invested in companies like Tesla and SpaceX and until he doesn’t pull out his investments, they are not taxable.
Here’s when it gets even more interesting.
When we sell a stock at a profit, we pay the capital gains tax. However, if we don’t sell it at all, probably even after we die, the person/party that inherits the stock will pay the tax only on the profit that’s garnered after they inherited the stock. Also, the original gains from the time since we purchased the stock remain untaxed.
To combat this scheme, there have been countless laws proposed, precisely the ones where the government increases the maximum capital gains tax rate, which can seriously contribute to the concept of ‘taxing the rich’.
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