Our resident "Colonel" is always advocating increases in the federal income tax rate.  What he doesn't realize is that federal income tax rates hurt the very people that he wants to help.

The government gets its money through a variety of sources. But mostly it comes from income taxes, payroll taxes, and corporate taxes.

But income taxes have multiple types within them: WAGES & CAPITAL GAINS.

Wages are taxed anywhere from 10% to 35% depending on how much you make.

But capital gains are a flat tax at 15% as long as you hold on to the stock for a year. Interest income works this way too.

And it is in the world of capital gains that the mega wealthy are able to make a lot of money but pay pay far less in taxes.  Congress has continued to tighten the laws to make it harder for individuals to get around paying at the wages rate (for instance, dividends aren't tax deductable for corporations and corporations have a higher tax rate than individuals now).

But the super-wealthy have tax attorneys who can play all kinds of games with the tax code.  Below are some common techniques that the super-wealthy use:

Low Interest Loans

As Warren Buffet pointed out recently, he could have lived quite comfortably without paying any taxes simply by having one of his companies give him loans each year. A loan isn't income.

Corporation Mania!

Open up enough LLCs to take care of your various needs, make sure they deduct effectively and you can end up with a bunch of companies with minimal "profit". The corporate tax rate on profits of less than $50,000 is 15%.  This kind of shell game can get pretty complicated and isn't worth playing unless you have immense amounts of money where saving even 10% in taxes can be helpful. 

One thing that many of these strategies try to avoid is medicare taxes. They're not capped (they should be IMO).  Medicare is 2.9% of a person's income. Hence, if you have $1 million in taxable wages, you would end up paying $29,000 in medicare which can get pretty obnoxious.  Hence, someone earning $10 million in income may find it makes more sense to distribute that income amongst corporations or find a way to pay it in dividends.

I'm not tax accountant or expert by any means.  But what I do know is that those who want "the rich" to pay more need to understand that the super rich aren't making most of their income through wages but through other sources such as capital gains and through corporations. 

Increasing the federal personal income tax rate definitely affects small business owners (a lot) as well as other economic drivers which in turn can have an adverse affect on the rest of society (small business owners create the majority of the jobs, take away their capital and they hire fewer people).