> Why isn't it fair that they pay the same tax rate?
As Buffett points out, they don't. Buffett's is lower, because capital gains are privileged with a substantially lower rate, because the mega-wealthy largely benefit there.
Income taxes are paid on income earned in a given year. That is, real dollars. Long-term capital gains are paid on growth spanning multiple years. The cost basis is not inflation-adjusted. The latter therefore taxes inflation on assets. The capital gains rate should be lower than the income rate as a consequence. How much lower I take no position on.
Ah, I misunderstood. I think it's a little bogus that the income source determines the tax rate, because then the rich just manipulate their income to use the source with the lowest rates which is a luxury the poor can't afford.
As Buffett points out, they don't. Buffett's is lower, because capital gains are privileged with a substantially lower rate, because the mega-wealthy largely benefit there.