A thousand millionaires owed no US Federal tax in 2007. 1,646 tax filers with incomes from $500,000 to $1 million were ruled to be “nontaxable”. While this was a tiny drop in the ocean of taxpayers, such people represent an inflammatory group who exploit the convoluted US Tax Code in order to wring the last drop out of the deduction crying towel. Some actually lied or used fraudulent methods to dodge paying any taxes, but most were perfectly entitled according to the Christian Science Monitor report.
Now, CNN Money reports that over 14,000 Americans who made between $.5 million and $1 million paid no 2010 federal income taxes.They comprise 1.6 percent of their income group.
Over 4,000 individuals made more than $1 million last year and make up 1% of Americans in that income group.
Of course, the 63.2 million Americans who earned $50k or less and paid no taxes make up the largest group at 68% of the low income group.
The next largest group was the 4.3 million who made between $50k and $100k without tax payments.
485,000 made between $100k and $500k, making up 2.1% of their income group.
To put things into perspective, almost half of the US households are believed to be free of federal income taxes for 2010. But most of these are low income households. Many of the low income earners still have to pay state and local taxes, and let us not forget the taxes on almost many of the essential things that they buy.
Some tax deductions are for taxes that were already paid, such as on foreign income. There is income from tax exempt bonds. There are losses on S Corporations and there is charitable giving among the hundreds of exemptions that take a serious professional to figure out.
If $50,000 sounds like a good wage, it is not when it must support a family of 4 or more.
Many tax breaks are to encourage investment in beneficial industries and infrastructure improvements, but the breaks seem to continue for long after the investors have recovered their investments and are raking in excessive profits.
As a result, even though small numbers of the “rich” escape paying any taxes, the public is becoming increasingly impatient with tax cuts for those who are already rich, or for corporations that are making record profits.
The best solution appears to be one that will permanently simplify and clean up the US tax code so that unfairly low tax burdens on millionaires, dodging corporate taxes while taking in taxpayer subsidies and making record profits, or sending income overseas in order to dodge taxes will come to an end.