Newly released statistics from the Internal Revenue Service showed that close to 1,500 people who earned over $1 million in 2009 paid no income taxes.
The IRS data showed there were 236,883 taxpayers making $1 million or more in 2009, of whom 1,470 paid no federal income taxes, and 235,413 whose returns were taxable. Among the possible reasons, according to ABC News, could be write-offs for charitable deductions, investments in tax-exempt state and municipal bonds, or foreign tax credits.
In contrast, the average income for taxpayers fell that year in the wake of the financial crisis by $3,516 to $54,283, a drop of approximately 6.1 percent, according to the Huffington Post.
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Meanwhile, unemployment claims climbed by nearly 2 million from 2008 to 2009, while the amount of benefits paid under unemployment almost doubled.
The number of 1040EZ forms that were filed in 2009 dropped 23 percent from 2008, indicating that many taxpayers who lost their jobs were no longer even filing their taxes.
10 Comments
Two Issues:
Government overspending - pet projects = political power
Tax Cheats - Self employed business owners making well over $100 k, reporting diddly squat and the poor, making $30k ish, reporting $8 to $12k, receiving EITC (money they never paid) benefits, housing, food, etc, etc..........
From: Revenue Agent
Posted by: Formergeek | August 22, 2011 6:58 AM
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As tax preparers know, there is nothing fair, logical or reasonable about the tax system in the US. It is a political tool as well as a source of revenue for all things which are ultimately, political and a result of an industry called lobbying.
Information is power and if the lower 80% income households had a clue, this country might well be facing unmanageable civil unrest. Pandora's box has been opened and as more of Helmsly's infamous 'little people' figure things out, we may see a bit more movement toward tax reform. It's a huge wheel that grinds slowly, but may be picking up momentum.
In the meantime, a lack of knowledge and understanding of what's behind the media 'shock & awe' will not impede ignorant statements of the masses who have been blinded by certain faith-based political or 'free-market' positions.
Most of the 46% who pay no federal income tax are low income wage earners who still do pay 7.65% of all their earnings in payroll taxes. Given the low wages they start with, how much should our tax policies leave them with to pay for basic subsistence? What good does it do to have them pay tax and leave them without the $$ to pay for transportation to get to/from a job, etc.?
Most of our clients are not in this position, but many live from one paycheck to the next. I just read a statistic which estimated about 77% live this way. There are about 14 million (a conservative estimate) people currently unemployed and many more who can only find part time jobs.
It's hard for me to believe there are those who think these people need to pay something in federal income tax in order to have 'skin in the game.' They're already being skinned in the economy and just don't have that pound of flesh the deficit/austerity hawks yearn for... while they continue to fund the obscene and often counter-productive 'defense' department (often 'offense').
These conversations have been held impotently for decades.
Posted by: LA_Crystal | August 16, 2011 5:16 PM
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The ABC article may not define millionaires, but this article does by quoting IRS data. Click on it above, and if you want to wade through a thicket of IRS tables, you will find that 235,413 taxpayers had an AGI of $1,000,000 or more in 2009.
Since you seem so envyous of the 46% who don't pay any income taxes, perhaps you would like to trade places with them. I'm willing to bet that they wouldn't mind dealing with your tax "problem".
I would argue that complaining about federal spending is a distraction from the expanding income gap in this country.
Posted by: cversich | August 10, 2011 1:13 PM
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Points well taken, Actually the ABC article said "According to a recently released IRS report, almost 1,500 of America's 230,000 millionaires avoided paying any federal income tax in 2009.". The article never said these people made over $1 million, which then the question is how did they define millionaires. Second, ABC was responsible in pointing out "A full 46 percent of the population pays zero income tax. The vast majority of these income-tax-free households have low incomes and qualify for child tax credits.". So I guess if you just rely on raw numbers the headline should read- 46% of taxpayers paid no tax while only .6% of millionaires paid no tax.
The big picture is that the rhetoric of who pays what is just a distraction from the fact that the feds can't control their spending and 1/3 of what I make goes to taxes.
Posted by: WCSCPA | August 9, 2011 4:22 PM
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How can citing statistics be considered irresponsible reporting? I don't see any comments or broad statements in the article, just facts, which can be so inconvenient when you're trying to make an unsupportable argument.
The explanations kdr mentions are possible, but I suspect they are rare. Furthermore, a true professional should know that muni bond interest isn't included in AGI.
Posted by: cversich | August 9, 2011 3:21 PM
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This is pure rhetoric to incite the lower income earners. My client base is mostly $75,000 to $400,000 and these people took a real beating in 2009 with a lot of them not paying taxes. Some of them have capital loss carry-forwards from 2008 that they are still using and the small business owners were using the 5 year NOL carry-back and getting refunds. This is irresponsible reporting.
The real problem is 97 years ago the feds tapped into a new revenue source, the citizens of the States. Since then the new revenue source has grown to +40% of the feds revenue and they have out spent that by $14 trillion. This is criminal or at the least maleficence and in the real world if you did something like this to someone else, you would be looking at jail time.
Posted by: WCSCPA | August 9, 2011 10:59 AM
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Any true professional may want to ask the question "please define 'earned $1mil'". If this is AGI and they paid no taxes it may be due to: a)they were benevolent and gave it all (only up to 50% of AGI is deductible) to charity. b)they supported our municipalities by investing in them (which any taxpayer may do and receive a lower return than comm'l bonds, etc.). They paid taxes to the governments where the income is sourced and it was at a rate equal to or greater than US taxes (which any taxpayer may also do). For someone to 'take the bait' of a media source and comment without knowing all the facts demonstrates a basic lack of intelligence. It is unfair to make a broad statement like this one without 'investigating and disclosing all of the facts. KR
Posted by: kdr | August 9, 2011 10:48 AM
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@RL: Your position is typical of people who don't want to use facts but rather use fiction because it suits them. No one has ever said that we should tax the wealthy to eliminate the deficit. No one. What is being said is that they could and should pay more to help reduce the deficit. Sorry if the facts bother you but misstatements and beliefs in them such as yours bother me more.
EdV
Posted by: edwval | August 9, 2011 10:12 AM
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@RL, I'm not asking these people to pay more, just their fair share would be fine with me, and I definitely think they should pay more than $0. I work hard for my money, and pay taxes like a good citizen should, why should millionaires get any different special treatment?
Posted by: manetco | August 9, 2011 9:59 AM
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There are 8,000-some-odd people who earn $10 million a year or more in this country. If you took everything they own, you would have $240 billion. There isn't the money to get anywhere close to solving our debt problem by raising taxes on, quote, unquote, 'those who can afford to pay a little bit more.
Posted by: RL | August 9, 2011 9:26 AM
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