In addition, because capital gains are income that has already been taxed once, the statistics that Cohen and Scheiber present do not tell the full story. While the top 400 taxpayers payed only 17 percent of their adjusted gross income in taxes in 2012, the portion of their income that came from capital gains had already been taxed previously, when it was earned as a salary in a former year. Therefore, the effective tax rate faced by high-income individuals in 2012 does not fully capture the burden faced by these taxpayers.
Despite these issues, the New York Times piece contains several interesting insights about the U.S. tax system. Perhaps the most important takeaway is that the more complex the U.S. tax code becomes, the more it will advantage those who can afford tax lawyers. Cohen and Scheiber describe how high-income taxpayers systemically make use of the most complicated parts of the tax code – partnership law, income sourcing rules, etc. – to lower their tax burdens. Again and again, the authors emphasize that these strategies are unavailable to taxpayers with lower incomes.