Money

1 in 189 Wealthy People Didn't Pay Taxes in 2009

| by Michael Allen

According to recently released data from the Internal Revenue Service, one in 189 high income Americans paid no federal income taxes in 2009. This included households making more than $200 million. The number of wealthy taxpayers managing to avoid the income tax spiked after the 2004 Bush tax cuts.

Bloomberg News reports:

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The percentage of U.S. taxpayers reporting adjusted gross income exceeding $200,000 who paid no U.S. income taxes increased in 2009 to 0.53 percent from 0.51 percent, meaning that one in 189 high earners avoided taxation, an Internal Revenue Service study found.

The filers reported tax-exempt interest along with deductible charitable contributions, medical expenses and other items to legally reduce their taxable income. They avoid the alternative minimum tax, which was created in 1969 in response to a report that 155 people earned $200,000 and paid nothing in taxes.

There were 10,080 households with adjusted gross income of at least $200,000 annually, or 0.26 percent of high earners, who paid no income taxes in the U.S. or to other countries.

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President Barack Obama has proposed the so-called Buffett rule, which would impose a 30 percent minimum tax on high earners; a congressional proposal implementing the rule set the threshold for the 30 percent tax at $2 million.

This graphic from Reuters shows the disparity: