Ok, so let's look at a couple of scenarios.
Older couple has about $4 million to their name in retirement accounts. Husband is semi-retired, getting pretty old, and works about half-time as a doctor making maybe $50k/year. His wife doesn't work. He's a multi-millionaire with very little income of any kind. The result, very little income tax as you'd expect.
He collects social security, qualifies for medicare, and maybe pays 2% of his income in federal income taxes. He only pays capital gains if he makes money in investments (which I think has been about break even for the last few years, so that's zero). He probably scratches a check for $1000 to the federal government in income tax (not including social security taxes etc.).
Now let's look at a hypothetical teacher. She has $2k in her checking account, lives basically paycheck-to-paycheck, makes $40k per year working full time. She has two kids, a mortgage, and an unemployed husband who collects unemployement benefits. She pays probably -10% in federal income tax. In otherwords, she gets more out of the income tax system than she puts in. She probably nets a $4k profit from the tax system.
A couple in their early 30s with $100k in their bank account are each making $150k per year. They haven't had much time to save up yet, but they make more than $250,000 per year. This means they don't qualify for just about any deductions, they get hit with AMT, and the full brunt of society's hatred for the rich (even though they are definitely not rich). They have high incomes, but very little savings compared to income. Their effective tax rate on all income is probably about 18-20%. So they pay about $50,000 in federal income tax.
^^ These are the people all of the income tax hikes are aimed at.
CEO of a major corporation gets paid $400k annually, but also owns stock. His stock increases by %10 for the year partially as a result of his work, but partially because the company is doing well. He takes some profits from the stock gains that net him an additional $2 million in income for the year. On his $400,000 he gets no deductions, AMT, massive income tax percentages etc. He probably pays 20% on that (federally). So he pays about $80,000 in federal taxes. On the $2M, he pays capital gains (15%), so he shells out another $300,000 in capital gains tax.
He paid 20% on his income, but he only paid 15% on his capital gains. For Obama's speeches, he'd treat this guy as having a $2,400,000 income for the year and calculate the total tax paid ($380,000) as 15.8%. Then he goes and looks at the marginal tax brackets and sees that if you make $40k per year your maginal tax rate is 25%!!!!
Havoc!! The school teacher pays more tax than the CEO!!!
Except she was given a check for $4k and he paid in $380,000. This is simplified, I left social security out because it just makes all of the math more complicated, but it exacerbates the story. So what shall we do about the CEO and the school teacher???
We should raise taxes on the 30 year old couple making $300,000. That's basically what Obama is saying. We're going to raise the INCOME tax, to fix the disparity between capital gains and income.
Here's my solution, stop calling capital gains income. Now all of the sudden the CEO pays 20% of his income ($300,000). Done. Job jobbed.
Edit:
Here's an even better solution, get rid of the income tax altogether and institute a sales tax. Now the retired doctor, the school teacher, the CEO, and the young hardworking couple all pay the same rate, and they pay proportionally to what they spend (which is largely in their control). There are no deductions, there is no gamesmanship, there is no distinction between sources of income, nothing... just a flat tax rate applied to everyone.
Such polarization in America.
