WaPo: Thousands of millionaires don't pay federal income taxes

Tax documents obtained by The New York Times show that Donald Trump declared a massive net operating loss of $916 million in 1995, enough to allow him to avoid paying federal income taxes for up to 18 years. The documents shed light on provisions in the U.S. tax code that allow wealthy individuals to avoid income tax payments even in years when they make millions.

In 1995, Donald Trump declared $3.4 million in business income, $7.4 million in interest income, and close to $100,000 in income from other sources like dividends, taxable refunds and wages. But this income was more than offset but hundreds of millions of dollars in reported losses from real estate and "the financial wreckage he left behind in the early 1990s through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan," according to the Times.

About 46 percent of all tax filers (individuals or households) pay no federal income taxes each year because of various exclusions. High-income tax filers make up a tiny portion of that number, but they are by far the biggest beneficiaries. More than half of the tax revenue lost to the most common tax exclusions stays in the pockets of the richest one-fifth of Americans, according to an analysis by the Congressional Budget Office.

While it's rare for high-earners to pay no federal income tax, it's not unheard of. In 2011, for instance, about 433,000 tax filers with incomes over $100,000 paid no federal income tax, according to estimates based on limited IRS data by the Tax Policy Center, a non-profit think tank. That number includes approximately 4,000 filers with an income of $1 million or more.

Read more: http://www.mystatesman.com/news/news/national-govt-politics/thousands-millionaires-dont-pay-federal-income-tax/nskB3/