From what I understand, the Capital Gains Tax is levied on investment gains.  If you own a bunch of stock, bonds, or securities, and it makes a profit, the Capital Gains Tax is what you pay back to old Uncle Sam.  There is a rate for both personal gains and corporate gains.

Right now the Capital Gains Tax on personal investment gains is at 15%.  In 1997 it was at 28%.  In 1970 it was at 32%.  In 1953 it was at 26%.

To gain some perspective, the federal income tax rate for middle class families (couples earning $70,700 to $142,700 and single people earning $35,350 to $85,650) is 25%.  If you are a couple earning $142,701 or more, you pay 28% or higher.

Republicans argue that raising taxes on high income brackets hurts everyone because it reduces the incentive to work and create jobs.  There’s not much evidence for that ever happening, but let’s assume that it could — that there is an amount a person could be taxed that would reduce his incentive to work and invest.  Would that disincentive kick in at 16% for personal investments?

Paris Hilton pays a lower Capital Gains Tax on her trust fund than a family earning $71,000 pays on their yearly income.  But we have to gut the New Deal because of a fiscal cliff.

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