Medium volume day trading (hundreds or thousands of transactions per day), where you make $500k per year (which will get you to the 40% marginal tax rate, 31% effective). Have to account for the basis of every trade, all short-term gains/losses, and let's assume they're doing that accounting work themselves (the hundreds of hours is a stretch though), and that they're not plugging a csv file into a program to take care of it for them so it's all manual gain/loss matching.
That's about as close as I could come without getting silly. Even oil companies like Exxon don't end up paying 40% (35% effective I think in their last fiscal year).
If you make $5+ million per year, and have nothing to offset any of that, you can end up paying over 40%. Pretty rare group of people likely to fall into that.
Add the ~8% spent by the employer for Medicare and Social Security, and the 31% effective rate becomes ~39%, doesn't it? For income above $200K, there's also an "Additional Medicare Tax" of 0.9%.
I always hear this comical assumption that the employee would automatically receive the matching Social Security and Medicare tax amounts if they were repealed but do you honestly believe that to be true and it wouldn't just go towards padding margins or buying more office supplies?
Employers by definition want to pay employees as little as possible, only enough so they stay.
That's about as close as I could come without getting silly. Even oil companies like Exxon don't end up paying 40% (35% effective I think in their last fiscal year).
If you make $5+ million per year, and have nothing to offset any of that, you can end up paying over 40%. Pretty rare group of people likely to fall into that.