Obama Is Flexible On Highest Tax Rates

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85. Investment income, including dividends and Cap Gains, differs fundamentally from ordinary

income because the investment is at risk.

If you want no risk, bank it in a FDIC-covered institution and your interest, as small as it is in this economy, will be taxed as ordinary income.

If you instead assume investment risk, and can wake to to find it all wiped out, the tax rate should be much smaller. As long as the government does not (and should not) cover your losses, why should you pay the same tax rate as those who are backed-up by the taxpayers? Just ask anyone who worked 50 years and then invested their nest egg with Bernie Madoff, or GM, if their investment losses were reimbursed.

But there is room for creativity. Don't tax the first $50K (or $45K or $75K) investment income but then apply a 25% rate to the amount above the cap. Intuition says that those tax rates would exempt any of the 99% and focus on high-earners.