High Income, No Taxes: How Big Money Beats the IRS - Fiscal Times

[Bill USA]

http://www.thefiscaltimes.com/Articles/2010/12/14/High-Earners-Who-Dont-Pay-Taxes.aspx#page1

No wonder President Obama is calling for tax reform. More than 10,000 Americans who earned more than $200,000 during 2007 paid no income taxes to the U.S. government. And it’s perfectly legal.

These high earners, among the estimated 47 percent of all Americans who pay no federal income tax, benefited from numerous popular, time-honored provisions in the tax laws that aren't likely to go away anytime soon. And the group, while accounting for a tiny sliver of the 143 million income-tax returns filed for 2007, has grown rapidly in recent years.

How can they do it?


> Losses from partnerships or S Corporations, typically small businesses whose income and losses flow through to the owners.

> Investments in nontaxable municipal bonds.

> Extraordinary medical or dental expenses.

> A combination of these factors and others.
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[Travis_0004]

1. Whats your point?

If somebody had huge losses, either through partnerships, or an S corp, then they didn't really net 200k, even if they did gross 200k before deductions. Same with medical bills. Lets say a guy made 200,000 and spent all that on medical bills one year, are you going to tell me that he needs to pay more in taxes?

Also, you will find out that many people on both sides support tax free municipal bonds, since they make borrowing cheaper for cities/states. There are certainly people who don't pay enough in taxes, but from the scenarios you listed, I don't have any problems with these people.

[ixion]

2. I agree

the bullet points listed are viable write offs, and if you're talking about a Sub-chapter S, it's not 200,000 take home as though it were a paycheck. That would be the net profit of the business.