Don't You Think It Is Time To Change Our Income Tax Laws?
NEW YORK (CNNMoney) -- It's a statistical blip, but a stunning one.
In 2009, six tax filers among the country's 400 richest tax filers owed absolutely nothing in federal income taxes.
Not a penny.
Now, it's not news that close to half of the more than 140 million U.S. tax filers end up with no federal income tax liability. Nor is it news that a sliver of those non-payers make seriously big bucks.
But it's eye-opening when anyone among the 400 highest income tax filers is among them.
a group, of course, high-income households pay more into federal
coffers than the vast majority of Americans combined, and their
effective tax rates are often higher than what most Americans pay.
So how is it that a lucky few can wind up owing nothing at all?
being able to examine the returns, which are confidential, no one can
say with certainty how those six filers in the top 400 did it in 2009.
return is a different story," said Edward Kleinbard, former chief of
staff at the nonpartisan congressional Joint Committee on Taxation.
the likely reason is straightforward. "It's because the tax code allows
them to do it," said tax lawyer Christopher Bergin, president and
publisher of Tax Analysts.
In particular, the foreign tax credit and the deduction for charitable contributions may have played big roles, Kleinbard said.
The very wealthy often
invest in foreign businesses and other non-U.S. investments. If they
pay tax on those investments to foreign governments, they can take a
credit on their U.S. return for those payments to avoid double taxation.
the richest of the rich also are well positioned to give away large
amounts of money. Charitable contributions let a wealthy donor
contribute to the social good while substantially dialing down his tax
And it's possible a number of other itemized deductions -- such as those for state and local taxes paid -- helped as well.
For Bergin, the phenomenon of uber-rich non-payers is yet another good argument for Congress to reform the tax code.
experts would prefer that policymakers greatly reduce the number of tax
breaks available and, if affordable, reduce income tax rates as well.
that kind of regime -- which is easier to propose than pass --
taxpayers would have fewer opportunities to shelter money and therefore
would have less reason to make financial or economic decisions based on
the tax consequences.
But since one goal of reform is to simplify
the tax system, lawmakers should avoid drafting special rules designed
to ensure that there are no non-payers above a certain level.
No wonder so many think they should up the taxes on the Rich. The problem
is not how much they are taxed but all the ways they can avoid paying what
they really owe. I am wanting to know what you think the Government should
do about the Income Tax System?
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