Why Do Kindergarten Teachers Pay More Taxes Than Hedge Fund Managers? - by Theresa Riley

Found here. Reproduced here for fair use and discussion purposes. My comments in bold.
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A popular meme that made the rounds last year revealed that the top 25 hedge fund managers in America made more money than all the kindergarten teachers combined. That’s right — just 25 men managed to take home more money in a year than all 157,800 kindergarten teachers in the entire country. (The author never explains why this is bad.)

These hedge fund managers make millions — sometimes billions — of dollars investing other people’s money with the expectation of realizing large capital gains. (The author never explains why this is bad.)

And a new video produced by Brave New Films points out an even greater absurdity: These millionaires and billionaires pay a lower tax rate than those teachers — and almost surely a lower rate than you, unless you’re part of the top .01 percent. (The author never explains why this is bad.

These types of investments gains are taxed at 20%, while income is taxed at rates up to 39.6%. Thus the author is comparing the income tax rate of kindergarten teachers with the capital gains tax rate of investors. 

Leaving aside the obvious non sequitur, we might want to ask: Who pays more actual tax? 157,800 kindergarten teachers earned an average salary of  $52,350. Their average net tax rate is between 12.7 and 17.35%, lower than the capital gains rate. So the author doesn't even get the facts of her basic premise correct.

For simplicity's sake, let's assume all of the kindergarten teachers are single. Their taxable income is $44,300 each. Actual income tax is $7686 using the highest tax rate. That's a total tax paid of 1,212,850,800 for the group. 

Now for the hedge fund managers. the link supplied by the author tells us that $21.15 billion was earned by the top 25. Thus we can calculate that they paid $4,230,000,000 in capital gains taxes. So, not only did they pay a higher tax rate, their total actual tax paid dwarfs the kindergarten teachers.)

All this brings to mind a conversation Bill Moyers had in 2012, early on in Moyers & Company’s run, with former Reagan budget director David Stockman. The architect of President Ronald Reagan’s now infamous “trickle-down” economics policies, even Stockman thinks today’s Republicans have taken their anti-tax dogma too far. He told Bill he would like to see the elimination of the carried interest loophole, hedge fund managers’ primary route to reduced tax rates. “It’s really pretty shameful,” he told Bill. (Apparently Mr. Stockman never took the time to crunch the actual numbers. It's really pretty shameful.)

“Taxes are the price we pay for civilization,” Stockman said, borrowing a quotation from Supreme Court Justice Oliver Wendell Holmes. “What they’re saying today is foolish, it’s irresponsible. How can anyone believe with the kind of deficit that we have — a trillion dollars, year after year after year — that we can keep taxes as low as they are?” (Assuming that additional taxes would be used to reduce the deficit. This has never actually happened.)