Advocates promised the new tax would bring in over $1 billion a year in new revenue. And they quickly saw their predictions surpassed: the state Department of Revenue estimates it will generate over $1.5 billion this fiscal year.
This appears to be a tax on regular income, but I thought that very rich people set up their finances so that their income appeared as carried interest, capital gains, etc. Are those subject to this tax?
Capital gains is always taxed at your normal bracket for holdings less than a year old and fall under special long term brackets for holdings >1 year. Those brackets are much smaller than income.
Capital gains isn't the issue. The issue is people taking out loans against their securities or other assets at often very affordable rates (until recently). Those loans are their income, the interest on those loans are deductible and they never have to sell their assets.
As long as interest paid is lower than taxes on capital gains the behavior will never shift.
The tax is on all taxable income not just regular wage income. Capital gains and carried interest are taxable income. They are subject to the tax if they make over the $1mil annually.
Capital gains are taxed less than regular wage income. Max capital gain rate is 20% while the max wage income tax rate is 37%.