Hillary Clinton might strengthen Social Security by taxing your investments

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Election season is in full swing now, with candidates trying to win voters by proposing ways to improve America. One big issue is Social Security, with many GOP candidates interested in reducing benefits and Democratic candidates offering ways to shore up the program and even strengthen it. One suggestion put forth by Hillary Clinton will likely worry some investors: making investment income taxable.

The big picture
Here's what that means: Right now, your income from work is taxable according to a schedule of tax brackets, with most Americans in the 25% or 28% tax brackets and the highest earners facing a rate close to 40%. (Of course, whatever tax bracket you're in doesn't represent the overall tax rate you pay. Thanks to deductions, credits, and progressively higher tax rates on increasing levels of income, your overall tax rate is likely considerably lower than your tax bracket.) Investment income such as long-term capital gains and dividend income gets a different -- and better -- tax rate, though. It's taxed at 15% for most of us, and 20% for high earners. Short-term capital gains are taxed at ordinary income tax rates.