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How to Pay No Taxes: 10 Strategies Used By the Rich
http://www.businessweek.com/articles/2012-04-17/how-to-pay-no-taxes-10-strategies-used-by-the-richIf you have lots of money, this was one of the best tax days since the early 1930s: Top tax rates on ordinary income, dividends, estates, and gifts remain at or near historically low levels. Thats thanks in part to legislation passed in December 2010 by the 111th Congress and signed by President Barack Obama. Starting next January, rates may be headed higher.
For the 400 U.S. taxpayers with the highest adjusted gross income, the effective federal income tax ratewhat they actually payfell from almost 30 percent in 1995 to just over 18 percent in 2008, according to the IRS. And for the approximately 1.4 million people who make up the top 1 percent of taxpayers, the effective federal income tax rate dropped from 29 percent to 23 percent in 2008. It may seem too fantastic to be true, but the top 400 end up paying a lower rate than the next 1,399,600 or so.
Thats not just good luck. Its often the result of hard work, as suggested by some of the strategies below. Much of the top 400?s income is from dividends and capital gains, generated by everything from appreciated real estateyes, there is some leftto stocks and the sale of family businesses. As Warren Buffett likes to point out, since most of his income is from dividends, his tax rate is less than that of the people who clean his office.
The true effective rate for multimillionaires is actually far lower than that indicated by official government statistics. Thats because those figures fail to include the additional income thats generated by many sophisticated tax-avoidance strategies. Several of those techniques involve some variation of complicated borrowings that never get repaid, netting the beneficiaries hundreds of millions in tax-free cash. From 2003 to 2008, for example, Los Angeles Dodgers owner and real estate developer Frank H. McCourt Jr. paid no federal or state regular income taxes, as stated in court records dug up by the Los Angeles Times. Developers such as McCourt, according to a declaration in his divorce proceeding, typically fund their lifestyle through lines of credit and loan proceeds secured by their assets while paying little or no personal income taxes. A spokesman for McCourt said he availed himself of a tax code provision at the time that permitted purchasers of sports franchises to defer income taxes.
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How to Pay No Taxes: 10 Strategies Used By the Rich (Original Post)
steve2470
Apr 2012
OP
Cleita
(75,480 posts)1. Wow, the 1930s when we had our last Great Depression. n/t
freshwest
(53,661 posts)2. Wash, rinse, repeat.