Final answer:
The maximum tax rate for short-term capital gains held for one year or less is 37%, which corresponds to the highest tax bracket for ordinary income as per the Tax Cuts and Jobs Act of 2017.
Step-by-step explanation:
The student has asked about the maximum tax rate for short-term gains held for one year or less. According to the Tax Cuts and Jobs Act of 2017, the highest tax bracket was reduced to a rate of 37%. Therefore, for individuals with the highest income, the maximum tax rate for short-term capital gains, which are taxed as ordinary income, would indeed be 37%. This applies to incomes over $464,850, where the top income earners pay a greater portion of the overall income tax burden.
The progressive nature of the federal income tax system means that as income rises, the percentage of income paid in federal income taxes increases. However, it's important to recognize that short-term capital gains are taxed at the same rates as ordinary income, hence the maximum rate aligns with the top marginal income tax rate.