Jan. 8, 2012 – The story begins by describing Todd Dagres as “a prominent venture capitalist and independent movie producer, (who) earned $3.5 million in 2003 and paid not a cent in federal income tax.” In fact, during the five year period he earned $58.5 million and paid a tax rate of 20%, although that income could command a federal tax rate as high as 35% or more.
Dagres and other top 1% income earners employ the tax device known as “carried interest,” according to a report by the Center for Public Integrity. It revolves around how you define your income. In this case, if it is treated as a bonus from an investment, rather than salary, you declare it capital gains, which is now taxed at 15%.
The 400 wealthiest Americans paid 29.3% in federal taxes in 1993, on average John Aloysius Farrell reports. By 2008 it had dropped to an average 18.1% for the same group.
“During that time, the combined taxable income of the top 400 soared from $16.3 billion to $91 billion,” Farrell emphasized.
“The idea that the income of millionaire fund managers should be taxed at a lower rate than that of their staff or other workers is an absurdity,” Sen. Carl Levin (D-Mich.) said recently.