They may even have heard this tantalizing detail: With five-year averaging, lump sum retirement payouts are taxed at rates as low as 7.5% , no matter how high a taxpayer's ordinary rate.
But unlike all of those folks, they are getting paid with this carried interest and paying tax at a lower capital gains rate instead of the usual ordinary income rate.
The long-term capital gain, however, would be taxed at a low rate, a little more than half your ordinary income rate.
Yet every penny you eventually take from a pretax 401(k) or a deductible IRA is taxed at the much higher ordinary income rate.
Once you reach age 65, you're even allowed to withdraw the money for other purposes, without penalty, and pay taxes at the ordinary income rate.
In 2011 and 2012, half of the carried interest would be taxed at the ordinary income rate, with the remaining 50 percent eligible for capital gains treatment.
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The overall AMT tax rate will be lower than your ordinary income tax rate, so why not hold off and get the benefit of the deduction when you're at a higher rate?
Many, but not all, preferred shares produce qualified dividend income that is taxed at a preferential rate of up to 20% versus the ordinary-income rate of as much as 39.6%.
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In a taxable account, net long-term capital gains are taxed at a rate lower than the ordinary income-tax rate for withdrawals from tax-deferred retirement plans.
She has no capital at risk (obviously) and pays the ordinary income tax rate.
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That means we will probably need to keep the capital gains (vs. ordinary income) rate for hedge fund managers and private equity people.
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If the expiration happens, ordinary income tax rate will go as high as 39.6% and capital gains taxes will be hiked to 20%.
Its strict discipline also brings benefits that ordinary exchange-rate pegs lack.
Assets held outside of retirement plans enjoy capital gains tax treatment (under current law) that is generally much more favorable than the ordinary income tax rate.
The ones that do pay interest resemble ordinary fixed-rate bonds.
After all, Democrats were vowing to let the top ordinary income tax rate rise from 35% to 39.6% when the Bush tax cuts expired at the end of 2010.
But so long as you're listed as the owner, you can still take it back if you need it, by paying taxes at your ordinary income tax rate, plus a 10% penalty, on the earnings you withdraw.
When a company buys back stock instead of paying a dividend, the stock value appreciates by the like amount of the dividend and long-term shareholders get a 50% savings on their tax bill (assuming a 40% ordinary income tax rate versus a 20% long term capital gains rate).
If the Bush tax cuts are allowed to expire, as currently scheduled, at the end of 2012, the top rate on ordinary income will rise from 35% to 39.6% and the top rate on long term capital gains will rise from 15% to 20%.
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For that top 1% of taxpayers, however, the maximum rate on ordinary income has increased from 35% to 39.6%, while the top rate on long-term capital gains and qualified dividends has increased from 15% to 20%.
This way capital gains and dividends will be taxed at a top rate of 15%, whereas the investment return on deferred pay is all eventually taxed as ordinary income at a top rate of 35%.
That would be far below the rate on ordinary income, which Democrats would restore to 39.6 percent.
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Research on specialist schools tends to confirm that they are improving pupils' educational standards at a faster rate than ordinary comprehensives.
The current top rate on long-term capital gains is 15%, and the top rate on ordinary income such as interest and salary is 35%.
The top rate on ordinary dividends would rise from 15% to 39.6%, although President Obama and other Democrats have said they favor holding it down to 20%.
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The top 35% rate on ordinary income is the lowest since 1925, with the exception of five years following the 1986 federal tax overhaul (the one that zapped a lot of shelters but lowered rates).
For most of us, the practical dollar and cents effects of AMT are far more than a mere 15% and 20% capital gain rate spread, or between a 35% and 39.6% top rate on ordinary income.
For instance, the proposal to treat dividends as ordinary income has met resistance in a Senate bill passed that would call to raise such rates to just 20% on higher-income taxpayers, well short of the rate on ordinary income.
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Above these levels, the tax rate on ordinary income has increased from 35% in 2012 to 39.6% in 2013, making each new dollar of itemized deduction worth 39.6 cents to the donor as compared to 35 cents in years past.
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