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SE MN | I would think the favorable tax rates on passive income are to encourage people to invest their money rather than spend it on non productive things. Over the long term, more investment should lead to more goods and services produced. The required passive income tax rate is found through trial/error/history: what is the highest passive income tax rate the government can get away with, while keeping real GDP growing at what they think is the right rate long term.
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Markets at all time highs rant
