Taxes...are a drag. That’s pretty much what “tax drag” means. (See: Deadweight Loss.) RuPaul is not involved.
Tax drag is the loss of would’ve-been income because of taxes. Whether that’s income taxes or capital gains taxes, tax drag is real. It's often used to contrast forms of income that aren’t taxed...or forms of income with special tax rules, things like municipal bonds and retirement savings. It can also describe the difference between two securities that are taxed at different rates because they’re in different countries.
Since taxes can eat away at investments, an investment’s tax drag is something for investors to take note of, just like inflation and fund management fees. For instance, in the U.S., there’s a larger tax drag on stocks that are bought and sold within a year than on longer-term holdings. This is to incentivize you to save up, buttercup. The government prefers you invest for the long haul, rather than play the short trade game.
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Finance: What is the Alternative Minimum...2 Views
Finance a la shmoop. What is the alternative minimum tax or AMT? People
it's evil pure evil originally the alternative minimum tax affectionately [Guy wearing devil horns with flames in the background]
called alt min existed so that truly wealthy taxpayers had to at a minimum [Guy opens a letter from the IRS]
pay something think about the concept when you envision a Warren Buffett with
over sixty billion dollars in net worth paying a hundred grand a year in taxes
yeah that's what he does well the problem the altman tax system wasn't
indexed to inflation so lots of middle-class folks today now indexed to [Lots of people walking]
inflation are caught in the alt min trap this is the tax system that ended up
punishing the super duper wealthy you know people like in orthodontists
married to a substitute school teacher that's who alt min punishes yeah the tax [Tooth and drawing of a teacher appear]
man cometh for you well Congress gave birth to this tax in
nineteen sixty nine because well at the time a hundred fifty five tax payers had [Guy holding the alt min tax bill]
the temerity to pay no tax today about 5 million people pay alt min taxes which
has really become a parallel tax or incremental tax to the normal tax people
already pay the taxpayer figures out his tax completely ignoring alt min at first [Woman looking through papers]
then she figures out what she owes under alt min and if she owes more under alt
min well then she pays alt min if she owes more without alt min well then she [The tax bills are shown]
just ignores it in other words the IRS always wins the schmucks caught in alt
min lose all sorts of deductions state and local taxes business expenses and
childcare and it's pretty much the middle class of America today who bears
the most pain in this alt min situation people in high tax states bear much of [High tax states are highlighted]
the burden but well good for the IRS they were really hurting [Desk full of piles of tax checks]
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