The 'You-Make-A-Lot-of-Money Tax' Hits More Americans

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11. In addition to the 3.8%, the person would pay 15% or 20% capital gain tax

3.8% tax on $100,000 income from an investment that resulted in that $100k gain is $3,800.

$38,000 on a million.

Oh my, how could I possibly survive with the paltry $962,000 I made in profit selling that Bond/ETF/Muni/Stock position?

On the $1 million gain, there would be a a 15% capital gains tax rate on some of it, and 20% on the rest of it, lets say about half at 15% and half at 20%, or $175,000. And then $38,000 for the 3.8% NIIT tax, for a total tax of $213,000. Leaving $787,000 after taxes.

Yes, that 21.3% overall rate is well less than some middle class worker paying 22% regular tax rate on their paycheck plus 7.65% payroll tax = 29.65%. And some count the 7.65% payroll tax that the employer pays as mostly or even entirely being paid by the worker on the theory that under competitive market conditions, that's money the employer would otherwise pay the worker. Whichever, a total of 37.3% in taxes is paid on that paycheck (22% + 7.65% + 7.65%).

I don't want people to think that the 3.8% NIIT tax is a replacement for the capital gains tax, but rather it is an adder to it. And yes, it should be a lot higher.