Dear RaifH,
Thank you for the follow-up!
Your explanation is accurate and well taken.
But I still consider the existing Long-Term Capital Gain tax table misleading because it is totally depending on the MAGI at all levels --- even $10 LTCG is taxed at 3.8% if MAGI is 250k for MFJ. So one should amend the table by adding a proclamation above the numeric matrix, to the following effects (using MFJ as example):
1) If Ordinary Income included in MAGI is $250k or higher, an additional 3.8% applies to all LTCG;
2) If MAGI is greater than $250k while Ordinary Income included in MAGI is less than $250k, an additional 3.8% applies to the portion of LTGC that exceeds $250k.
By doing so, the seemingly simple LTGC tax table can survive and serve many folks whose MAGI is still less than the threshold. May be all the institutions who publish the table still need to find some incentives to amend the table and making the knowledge more transparent to taxpayers. Given that NIIT started in 2013, it is a shame that they haven't found any yet.
I sincerely thank you for answering my questions and facilitating the discussion, which I hope can benefit many.
