4,000 of the richest in Romney’s ‘47 percent’ do not pay income tax
By Jeanne Sahadi
CNNMoney.com
Nobody’s really talking about this slice of the pie, but Mitt Romney’s “47 percent” who pay no federal income tax include several thousand of the highest-income households in the country.
The Tax Policy Center estimates that 4,000 households with incomes over $1 million ended up with zero federal income tax liability in 2011. Another 14,000 made between $500,000 and $1 million.
Combined, those households represented just 0.025 percent of the more than 76 million who did not pay.
But their presence in the No Tax Club underlines the fact that the tax code is chock full of tax breaks and exceptions benefiting people up and down the income scale.
There are various reasons why a household booking more than $1 million in income could owe nothing in federal income tax, experts note.
Among them, people who live off their investment income and report large investment losses in a given year may be able to offset the taxes owed on their investment gains.
Or they may have gotten a lot of their income from tax-free investments, such as municipal bonds.
Another possibility: a wealthy tax filer may report a lot of dividend income from foreign stocks on which he already paid tax to a foreign government. He would get a foreign tax credit on his U.S. return, to avoid double taxation. And if his foreign tax bill tops his U.S. tax bill, he wouldn’t owe anything to the IRS on that dividend income.
Add in some charitable contributions and other tax breaks to any of these scenarios, and a tax filer could whittle down down his federal income tax bill to zip.
It’s impossible to say how many households -- rich and otherwise -- would end up with zero federal income tax liability under Romney’s tax reform proposals. There are still too many unknowns -- such as which tax breaks he’d be willing to curb to pay for his proposed tax rate reductions.
But it’s a fair bet there will still be a notable number. The percent of non-payers fluctuates from year to year, but there has not been one year since 1916 in which there were no non-payers, according to the Tax Foundation.
Among the returns filed -- which excludes people who didn’t have to file because their income was too low -- non-payers have ranged from a low of 7.5 percent in 1943 to a high of 56.1 percent in 1934. Since 2000, the group of non-payers has grown to more than 40 percent from 25 percent.
+ Top Story
New York’s attorney general on Monday accused Wells Fargo and Bank of America of violating the terms of last year’s national mortgage settlement by failing to process hundreds of refinancing requests promptly.
Christine Pacheco, director of career services at The Art Institute of Colorado, and Kristin Frank, director of career services at The Art Institute of Phoenix, share the top dos you should include to get noticed and get your foot in the door - and the don’ts that could get your resume tossed in the trash.
Whether you're one of those people in need of a personal trainer or you're looking for work in a dismal job market, the bureau of labor statistics reports "employment of fitness trainers and instructors is expected to grow by 24 percent from 2010 to 2020, faster than the average for all occupations."
President Barack Obama's fiscal year 2014 budget is unlike any previous presidential budget request in recent history. It is not a statement of the president's vision for the federal budget. It does not represent what he thinks is the best course of action for spending, taxation, and...
Sheryl Sandberg. By now you know who she is, you've heard her story, and you have her book. You know the whole shebang, and you've made up your mind whether you like her or not. I must admit that before I met her in person, I was not an immediate fan.
African American investors report high levels of confidence in their financial future, along with optimism about the political and economic future of the country, according to a recent Wells Fargo nationwide survey.
A new report reveals houses are selling faster and for more money, yet another indicator of a rebounding housing market. According to the National Association of Realtors, full-year sales of previously owned homes increased by 9 percent in 2012 over the previous year.
The migration of women from the workforce into business ownership is one of the great economic realizations of the American Dream. The U.S. Women's Chamber of Commerce has grown to more than 500,000 members.