Over 18,000 High-Income Taxpayers Owed No U.S. Income Tax Liability in 2008

New statistics released by the Internal Revenue Service showed that the number and percentage of taxpayers earning over $200,000 a year who owed no U.S. income taxes nearly doubled from 2007 to 2008.

The statistics, released Tuesday in the IRS’s Statistics of Income Bulletin, showed that in 2008, there were 4,375,660 individual income tax returns reporting an adjusted gross income of $200,000 or more, and 4,416,986 returns, with expanded income of $200,000 or more.

“Expanded income” includes tax-exempt interest, nontaxable Social Security benefits, the foreign-earned income exclusion, and long-term capital gains.

“These returns represented 3.072 percent and 3.101 percent, respectively, of all returns for 2008,” said an article in the SOI Bulletin by IRS economist Justin Bryan.

In 2008, there were about 180 fewer returns that showed AGI greater than $200,000 compared to 2007.

For 2008, of the 4,375,660 income tax returns with AGI of $200,000 or more, 18,783 (0.429 percent) showed no U.S. income tax liability; and 10,824 (0.247 percent) showed no worldwide income tax liability, the study found. For 2007, of the 4,535,623 returns with AGI of $200,000 or more, 10,465 returns (0.231 percent) had no U.S. income tax liability, and 4,841 returns (0.107 percent) had no worldwide income tax liability.

The 0.429 percent of high-income people who owed no U.S. income tax liability was the biggest percentage of non-payers going back to 1977, Bloomberg.com noted. In addition, the study showed that the percentage of non-payers nearly doubled in 2008 from 2007.