How Do Many Weathy Americans Legally Do Not Pay Income Taxes

The Famous “Top 1%” of US Households Currently Legally Do Not Pay Federal Income Taxes Under Current Tax Laws

Not necessarily taking any political sides, one economist writes that this phenomenon is a direct result of Republican policies – but the more troubling issue is how many of the well-off pay no tax.

One reason, is that capital gains are a huge percentage of their income – and these taxpayers  may have losses from previous years to offset any realized gains this year. Perhaps some chose to invest all their wealth in tax-free municipal bonds.  If you earn enough to live on from these legally tax-free investments, you pay no tax.  The trick is to have enough wealth to invest enough money in tax-free muni bonds to begin with – to have the amount earn enough income to live on. 

So, in summary, unless you have already accumulated enough wealth to never have to work again in a job and can take advantage of the existing legal tax loopholes using tax attorneys and accountants to plan accordingly – don’t count on getting out of paying US Federal Income taxes if you belong to the middle-income level which most Americans find themselves currently – subject to the full extent of the tax code and brackets that are applicable to them.

Read the Full Story in the NY Times:

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