Sigh. How embarrassing. Please ignore my previous post.
No problem, this stuff is super confusing.
There used to be large options for declaring tax-free income, through the standard deduction, the personal exemptions, the dependent exemptions, deductible accounts like 401ks, and (in some cases) by offsetting income above the 0% tax rate with tax credits, for example the EITC, child tax credit, or the various savers credits. Together, these made it pretty easy for a family with a couple of kids to have up to ~$60k of income and still pay zero taxes without even itemizing!
Things are a little harder now, and this impacts mustachians who are planning on drawing relatively low incomes from their 401k accounts in retirement because it looks like we will face higher tax burdens under the new law than we did under the old one (but lower tax burdens while still working and earning money). These are exactly the sorts of complications that make it so hard to compare real estate returns to stock returns. The tax treatments are very different, not just in percentages but in what amounts count as income at what times.
For example, I make more money in property price appreciation than I do in rental cash flow. If I pocket $10k in cash from excess rents this year, that amount is not taxed as income until after I deduct depreciation and expenses from my gross rents (making my net rents, the most important part, kind of an afterthought in the taxation process). If the value of the home goes up by $20k in the same year, I pay zero taxes on that increase until I sell the house, at which point I pay either capital gains (which depends on my income level) or depreciation recapture or both. But those taxes are only due in the future, and are potentially avoidable if I hold the property until death and pass it on as an inheritance. The whole system is just loopholes on top of loopholes and exceptions to exceptions.
Income tax, by contrast, seems relatively straightforward despite the myriad of deductions and credits you can get. At least there's a form to walk you through the process, unlike RE taxes which are just a black box to most people.
edit: there IS a zero percent tax bracket for capital gains income, if your total income is in the 10 or 15% income tax bracket. That makes total sense, right?