It is proposed to eliminate the distinction between short-term and long-term capital gains and dividend income and to institute a graduated tax rate based on the investments’ percentage of total income.
Current tax law discourages investment by levying higher effective rates in lower income households while keeping effective rates lower for those who primarily earn investment income. With a graduated tax scale, it would encourage investment in lower income households and ensure that professional investors pay a fair share of taxes at rates similar to the rest of their respective income brackets.
For example:
< 25% or less of total - 15% rate
25 – 50% of total - 20% rate
50 – 75% of total - rate between 20% and wage rate for income bracket
> 75% of total - wage rate for income bracket