IRS Study: More Than 10,000 Wealthy Americans Paid No Income Tax At All
According to a new study from the Internal Revenue Service out of the 3.9 million households that reported an adjusted gross income of $200,000 or more in 2009, more than 10,000 households paid nothing in taxes. The study was released on Tuesday morning by the IRS.
What is the secret to making money and not paying nay taxes on it? Deductions, Deductions and Deductions! More than one third of the non-tax payers deducted non-reimbursed employee expenses. Other big deductions are charitable contributions, medical expenses and loses related to a small business.
The study said,
“High-income returns are more often nontaxable as a result of a combination of reasons, none of which, by itself, would result in nontaxability,”
The Obama Administration is pushing a proposal commonly referred to as the “Buffett Rule”, named after billionaire investor Warren Buffet. Under the proposal the wealthy would have to pay a 30% tax rate regardless of any deductions or incentives.
The new study’s data from 2009 also reflects a dip in earnings from 2008, likely related to the financial crisis and recession. There has been a heavy focus on the tax code in this election year as it is being pointed out that the wealthy use the confusing and voluminous tax code to avoid paying a percentage of income that most average Americans are forced to pay.
Tax policy is also going to be front an center this year. In addition to typical election year tax issues, the Bush Tax Cuts and the Working Class Tax Credit are due to expire in January.