IRS: 1,470 millionaires paid no income tax in '09

[DearAbby]

Where did the money go? Tax "expenditures" (otherwise known as deductions, write-offs, subsidies or loopholes), charities, municipal bonds and tax payments to foreign governments, according to a recent IRS report (pdf) that ABC News noticed over the weekend and that the Los Angeles Times picked up today.

More than 235,000 taxpayers earned $1 million or more in '09, with 8,274 making more than $10 million, the Internal Revenue Service said. All told, there were 140 million taxpayers.

The nonpartisan Tax Policy Center reported last month that 46% of American households (known as "units") actually will not pay federal income taxes for this year nor will receive refunds. That's because of low incomes, credits for children or other dependents, or exemptions. Read that report here.

Meanwhile, the IRS today issued a "reminder" to "U.S. taxpayers hiding income in undisclosed offshore account": All of you sneaky people are "running out of time to take advantage of a soon-to-expire opportunity to come forward and get their taxes current." The deadline is Aug. 31.


Old article of August '11

http://content.usatoday.com/communities/ondeadline/post/2011/08/irs-1470-millionaires-paid-no-income-tax-in-09/1

[Yupster]

1. Tax Free Municipal bonds

Can't beat them.

Safe, completely tax free. Pays around 5 %.

Make a million, pay zero in taxes.

The millionaire's best friend.

[Travis_0004]

2. Ok, so what do you propose

I will agree with you that the rich are the main people that buy municupal bonds. Thier higher income tax bracket, means the bonds are a better deal with me. If I was to buy some bonds, I would buy corporate bonds, because my lower tax brackets make earning higher returns (even if I have to pay taxes on it), worth it.

Lets say the government decided to tax municipal bonds. They no longer have any tax advantages over regular bonds, so they must pay higher prices to get people to buy them. That 5% bonds would now cost the city more, lets say 8%. The millionaire will then pay taxes, and end up with a return of close to 5%. The millionaire is no better or worse off, but cash strapped cities now have to spend more money to raise capital. I guess the government could take the extra tax revenue and send it to the city, but in effect, that is what they are doing now.

So I have no problem with municipal bonds. The tax free status allows cities and states to raise money more cost effective. I know the city I live is broke right now, they cant afford in increase on the cost of borrowing of several hundred basis points.

[Yupster]

4. I don't propose anything

I think municipal bonds are a good deal for both sides.

[rasputin1952]

3. Color me surprised!

mention taxes to the wealthy and suddenly the wealthy are