Millionaires who owe no federal income tax

Source: CNN.com

They're in good company, of course. Nearly half of all U.S. households, or 69 million, are estimated to have owed no federal income taxes for 2010. The vast majority of them, however, are low income.

But 18,000 were households taking in more than $500,000 -- and of those, 4,000 made more than $1 million.

How can it be that those with big income streams owed zip to Uncle Sam?



Read more: http://money.cnn.com/2011/05/09/pf/taxes/millionaires_income_tax/index.htm?hpt=T2

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Ain't capitalism wonderful? :patriot:

that allows them to have 100% return of their federal taxes?

How many those that did owe federal taxes have the same exact exemptions and deductions or higher of their counterparts?

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they do not need to pay taxes. "Oh we took a big hit in the rental units so that's a write-off." Oh, we couldn't sell those two other homes so we wrote off the mortgage interest."

I say utter bullshit. They make a bad business investment fuck them. They can pay taxes like the rest of us. They drive on the same interstates, they land at the same airports, they use the same waterways for their boats, they eat the same regulated food, they eat at the regulated (health) restaurants, they live in the same country where the US Coast Guard protects our borders, etc. If they want the same things they need to pay for them like everyone else.

They use the same FDIC system that protects them when banks fail. They use the same FDA approved drugs so they don't die taking bad medicine. Some probably get big farm subsidies. Some probably get military pensions.

Oh, and when their mansions blow away they are the first to beg for Federal Assistance.

Rental property can be used as a place to store or expand wealth. The hope is that income will offset expenses and appreciation will build wealth. There's even an IRS exemption on capitol gains taxes when the interest exemption falls to the point that the income/expense ratio goes negative (or positive for income tax purposes); it's an "exchange" in that the first property is sold and a new property is purchased for the amount of the sale and capitol gains are offset.

The goal is to have a break-even on income/cost and build wealth through escalating property ownership. At retirement the property can be sold or used as income producing when taxable income from regular sources falls.

The fly in this ointment is the falling property values BUT that is offset by increased rental rates as foreclosures increase occupancy and offset the portfolio loss.

It's complicated . . .

Especially that last line about Fed Assistance. Fuck!

Tax-free bonds are supposed to help state and local governments raise revenue that they need. The concept behind charitable giving is that it gets money more directly to where it's needed.

Congress is ultimately responsible for high-income people paying little or no federal income tax. The tax code has redirected the money they would be paying to other places, some more beneficial than others. All of us who pay taxes, at least ones with brains, structure our finances to take best advantage of tax law as it pertains to us personally. That will always be true no matter what the code says.

(Well, maybe you're not one of "us," but I think you get the point.)

So if they aren't on "our" side, we have only ourselves to blame.

Voting is a farce we go through, that we might sustain the illusion that it's "our" government we elect, when the fact of the matter is that a congressional aspirant can't even be nominated without first selling himself/herself to "they."

A guy can dream.

Only half-joking, since the tube has done the most to reduce the collective attention span to that of a tsetse fly.

And the wealthy interests who pay for the political advertising that works so well at brainwashing the general public.

:shrug:

so how much or how little you excerpt matters little.

...I've been chastized a few times for taking too much from an article or story! :dilemma:

Source: CNN

Those who say the rich pay their fair share point to the fact that the top 1% of taxpayers end up paying almost as much in federal income tax (and some years even more) as the bottom 95% combined.

Still, it's unlikely that even the most anti-tax, pro-wealth advocates would find this particularly fair: A very small number of millionaires end up owing no federal income tax at all.

They're in good company, of course. Nearly half of all U.S. households, or 69 million, are estimated to have owed no federal income taxes for 2010. The vast majority of them, however, are low income.

But 18,000 were households taking in more than $500,000 -- and of those, 4,000 made more than $1 million.


Read more: http://money.cnn.com/2011/05/09/pf/taxes/millionaires_income_tax/

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Of course, just like their defense of oil company tax breaks, the problem is not that we tax too little, but that we spend too much!

So, lets gut programs that benefit the elderly and poor, and leave tax breaks to the rich and powerful in place.

:popcorn:

So non-investors and investors who took fewer risks get to pay more to mitigate these losses. What was the social good that this rule was meant to promote again?

Hedge Fund Gamblers Earn the Same In One Hour As a Middle-Class Household Makes In Over 47 Years
By Les Leopold, AlterNet
April 11, 2011


-snip-

In 2010 John Paulson led the list with a record $4.9 billion in personal earnings. That’s a whopping $2.4 million an HOUR. Here’s a factoid to make you wretch: It would take the median US household over 47 years to earn as much as Paulson pocketed in just 60 minutes. And, every hedge fund manager pays a lower tax rate than the average family.
...
The top 25 hedge fund earners took in $22.07 billion in 2010. Thanks to a generous tax loophole these billionaires will pay a top tax rate of 15 percent instead of 35 percent. Closing that loophole on just those 25 individuals – just 25 guys who wouldn’t miss a penny of it -- would raise $4.4 billion, which is enough to rehire 126,000 laid-off teachers.
...

How can hedge fund firms with fewer than 100 employees make as much profit as companies like Apple with tens of thousands of employees?

This much we know. They speculate. The place bets. They jump in and out of markets at lightening speeds. They have secret betting formulas just like card counters in Vegas. And as any state attorney general can tell you, a good number of them cheat by betting with illegal insider tips, front-running trades, sneaking in trades after markets close and so on. The entire industry is barely regulated as it plays with a bankroll of $2.2 trillion that comes mostly from enormously rich investors. You can bet the next crisis will bubble out of this vast and murky casino.


more: http://www.alternet.org/story/150570/hedge_fund_gamblers_earn_the_same_in_one_hour_as_a_middle-class_household_makes_in_over_47_years

Such as tax-free bonds which provide funding for state and local governments, and charitable contributions.

Every thinking taxpayer structures personal finances so as to take best advantage of the tax codes. People at different income levels exploit different kinds of exemptions and deductions.

Congress is responsible for the tax codes. If there are provisions in the law that give an unfair advantage to high-income people, it's up to Congress to fix the problem. If Congress isn't doing the will of the people, it's up to us (the voters) to elect someone who will.

If you're making a million a year and not paying taxes, you are not paying your fair share, period. I don't care what you invested in. There is a limit on deductions for donations, so that is not accounting for any million a year earner's freedom from taxes.

Besides, I know more of those folks than I'd prefer and their donations are not free from quid pro quos, whether it's a job for a wayward family member or your name on a building, or getting the organization to push your agenda by putting a lot of strings on the donation, etc. Not saying every donation is like that, but more are than most people realize, when it comes to the size donations these folk can make..

"If Congress isn't doing the will of the people, it's up to us (the voters) to elect someone who will."

Almost makes me want to sing The Star Spangled Banner, except it doesn't seem to work in reality. Lobbyists, corruption, Senate filibuster rules and who realistically has a prayer of getting elected are among the many reasons. There are more, of course--subject is large-- but, for whatever reasons, it just doesn't work that way.

If you're making a million a year and not paying taxes, you are not paying your fair share, period. I don't care what you invested in.

You don't consider investing in state and local bonds, and charitable giving, to be beneficial to society?

Or is your concern confined to supporting the federal government?

Almost makes me want to sing The Star Spangled Banner, except it doesn't seem to work in reality. Lobbyists, corruption, Senate filibuster rules and who realistically has a prayer of getting elected are among the many reasons. There are more, of course--subject is large-- but, for whatever reasons, it just doesn't work that way.

It will continue to not work that way as long as voters keep allowing their television sets to dictate who gets their votes.

"You don't consider investing in state and local bonds, and charitable giving, to be beneficial to society?"

Strawman


"It will continue to not work that way as long as voters keep allowing their television sets to dictate who gets their votes.

IOW, until hell freezes over. People don't spend billions on advertising for nothing.

Right or wrong, good or bad. You have an axe to grind.

Of all the non sequiturs I've seen on message boards, that one takes the cake.

BTW, I just saw another LBN thread that may interest you. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4845826

:nuke:

In a way you're right, slackmaster. Congress is responsible for the tax code. On the other hand, though, what motivated them to propose and vote for those laws that form the tax code? Some internal sense of moral right and wrong? Responsiveness to the electorate at large? Don't make me laugh. The primary thing guiding their hands is the wishes of their campaign donors - the very same people who are benefiting from an unfair tax code, using the very same dollars that they save because of it. Don't blame the puppets. Blame the ones holding the strings.

The incumbency system, with its career politicians and heirs apparent, manifests a perversion of what the founders of our nation had in mind.

Public service was supposed to be just that: A temporary diversion from one's chosen life path to contribute to the public good, after which one returns to one's farm, dental practice, art studio, or whatever.

Don't blame the puppets. Blame the ones holding the strings.

People, the voters in particular, have the choice not to be puppets. But sadly most of us are too lazy and too apathetic to do what really needs to be done.

Probably pressure from state and local governments, school districts, hospital dstricts and universities who want to be able to borrow money at below market rates.

Roth IRA's and Roth 401 (k)'s were set up to protect lower income workers.

A lower income worker with four kids would have no tax liability. Yet he was putting money away into a 401k where he would push his tax liability to his later years when maybe he's a millionaire and has a large tax liability. It didn't make any sense yet you'd have to contribute to get the company match.

The Roth lets you pay the tax now (when maybe you don't owe any) and get the money tax free in retirement (when maybe you'd have a large tax liability).

Of course then you could yell at the guy when he retires a millionaire with a huge Roth 401 k and pays no tax on it.

Government should not be for sale at any price.

They're in their 80's.

They almost avoid all taxes but not quite.

When they retired they moved all the investments they could to muni bonds. A few stocks that are never sold.

Of course they don't pay tax on their tax-free bonds. Pays them decent dividends. Aside from social security that's the only income they show.

The kink in the plan is their IRA's. Since they're over 70.5 they have to take distributions every year and that's taxable.

If they had converted them to Roths then that income would be tax free too, but it would have been a big tax bite the year they converted.

I don't know what you do about that? Do you want to make tax excempt interest taxable? School districts and hospitals will sure scream if that happens. You could say Roth IRA distributions are taxable, but that would be double taxing since the contribution was taxable the year it was made. I guess you could make the gains of Roth IRA's taxable. Boy would that get people screaming and a lot of people have Roth 401 (k)'s.

Anyway...

And you make a good point that tax deferral is not the same thing as tax avoidance. I know a lot of people who are taking mandatory IRA distributions now too. People the age of my parents.