Several Thousand Highest-Income Households Paid No Income Tax In The US
By Countercurrents.org
20 September, 2012
Countercurrents.org
“Mitt Romney's "47%" who pay no federal income tax include several thousand of the highest-income households in the US”, said a CNNMoney report. On the other hand, about 6 million Americans, mostly middle class will face a tax penalty for not getting insurance.
With the headline “4,000 millionaires in Romney's '47%'” @CNNMoney carried Jeanne Sahadi’s report [1] on September 18, 2012 that said:
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% 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 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 his federal income tax bill to zip.
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% in 1943 to a high of 56.1% in 1934. Since 2000, the group of non-payers has grown to more than 40% from 25%.
Ricardo Alonso-Zaldivar of AP made another report that was headlined “Tax penalty to hit nearly 6M uninsured people” [2]. The Washington datelined report said:
Nearly 6 million Americans will face a tax penalty for not getting insurance, congressional analysts said Sept. 19, 2012. Most would be in the middle class.
The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed.
The budget office analysis found that nearly 80 percent of those who'll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.
Starting in 2014, virtually every legal resident of the US will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.
A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.
Nonetheless, some people might still decide to remain uninsured because they object to government mandates or because they feel they would come out ahead financially even if they have to pay the penalty. Health insurance is expensive, with employer-provided family coverage averaging nearly $15,800 a year for a family and $4,300 for a single plan. Indeed, insurance industry experts say the federal penalty may be too low.
Many Republicans regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it. However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s. It's also a central element of the 2006 Massachusetts health care law signed by then-GOP Gov. Mitt Romney, now running against Obama and promising to repeal the federal law.
Source:
[1] http://money.cnn.com/2012/09/18/pf/taxes/romney-income-taxes-millionaires/index.html?source=yahoo_hosted
[2] http://news.yahoo.com/tax-penalty-hit-nearly-6m-uninsured-people-194442599.html
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