Why raising taxes on unearned income makes sense.

Regardless of what term you use to describe investment income, this income is not currently subject to social security or medicare taxes. Earned income is already taxed at a higher level in most cases than investment income, which is a disincentive to work. Rationalizing our taxation system will require increasing the taxes on capital gains to at least the same level as taxes on earned income. This is entirely normal and healthy.

The truly nonsensical notion was identified by Warren Buffet.

Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”

The solution to this problem is very simple – raise the tax rate on unearned investment income. Anything else is truly nonsensical.

The Nonsensical Notion of ‘Unearned Income’