A corporate accountant could have a higher rate than a partner in an accounting firm. Individual income taxes can be deferred on profits left inside a corporation instead of deposited in a personal account. % 40 30 20 10 0 Wages Businessincome $100,000 $300,000 $500,000 Effective marginal tax rate % 40 30 20 10 0 Employee Contractor $100,000 $200,000 $300,000 $400,000 $500,000 Effective marginal tax rateThe proposed classification system is unusual. “Wage income will be the highest taxed income,” said John L. Buckley, a chief of staff for Congress’s Joint Committee on Taxation in the 1990s. “Somebody working for a wage gets a higher tax rate than somebody doing the same job under a different legal structure.”

Source: New York Times December 09, 2017 17:07 UTC