Wealthy investors prefer a flat tax rate to the current graduated system that requires people who make more money to pay a higher percentage of their income in taxes.
Proponents of a flat tax say it would eliminate bureaucracy and loopholes, and make it easier and less expensive for people to file their taxes. They see the system as fair because everyone pays the same percentage of income. Critics say a flat tax system would place a heavier burden on the middle class and eliminate incentives to contribute to charities and nonprofits.
Preference for a flat tax rate increases with wealth. More than 52 percent of investors with $5 million or more feel a flat tax rate would be most fair, while 25 percent prefer a progressive tax.
In contrast, investors with less than $100,000 (not including primary residence) are more likely to prefer a progressive tax. Less than 35 percent say a flat tax would be most equitable, while nearly 38 percent say a graduated tax rate would be most fair.
Of all types of taxation, federal income tax is the most worrisome to investors of all wealth levels. Seventy-three percent worry about federal taxes, while less than 10 percent express concern about state income taxes and fewer than 5 percent are worried about income taxes. More than 16 percent of millionaire investors are concerned about capital gains taxes.
For 2011 the IRS will levy the top tax rate of 35 percent on income in excess of $379,150. The rates decrease to a low of 10 percent on income less than $17,000 a year.