No less an authority than the Internal Revenue Service reports that at least 10,080 households with gross incomes of over $200,000 paid nothing at all in income taxes in 2009. (OK, that doesn’t literally put them all in the top 1 percent, but pretty close.) Those high earners are not (necessarily) breaking any laws—just taking clever advantage of a panoply of tax deductions. They’re also ducking the alternative minimum tax, which, as Bloomberg explains, “was created in 1969 in response to a report that 155 people earned $200,000 and paid nothing in taxes.” The horror.
Interestingly, Bloomberg reporter Richard Rubin also notes that it’s not only the rich who escape the taxman. “Overall,” he writes, “about half of U.S. tax filers pay no income taxes, and they are concentrated among lower and middle-income households. For them, tax breaks such as the child tax credit and the earned income tax credit combine with the standard deduction and personal exemptions to eliminate tax liability.”
Thanks to LA Observed for the tip.
