Greetings:

Here is a headline from the New York Crimes that might frost you a little.

The Nontaxpaying Affluent Grew by 15% in One Year
http://www.nytimes.com/2005/07/01/natio ... nted=print

Before you get too outraged, however, note that the top 2% of income earners paid a whopping 53.5% of all income taxes according to the article.

Not mentioned in the article, but reported by the IRS, is that there is another group of earners that pay no income tax at all and they make up the bottom 1/3 (approx.) of the working population. Even so, they are productive members of our society because they do work.

Finally, a group that that is never factored into the equation is the one that neither pays any tax nor is productive to society: the welfare class.


- Kirt Blattenberger

Interesting article. Since the people actually FILED their tax returns, though, I would have to assume that they reasonably complied with the tax laws. If so, they genuinely did not owe any taxes despite their high income.

The ones you have to worry about (at any income level) are the ones who don't file at all.

I don't think that non-taxable municipal bonds mentioned in the article could be the big reason why these people did not owe any tax. They would probably have been hit with the Alternative Minimum Tax if so.

I suspect that a sizeable percentage of them actually live and work overseas. Then, there is an earned income exclusion and tax credits for foreign taxes paid. It could be that a lot of those people paid very high taxes, just to other countries besides the US. Coincidentally, 2002 is when a lot of contractors would have been heading to Afghanistan for reconstruction. And I'll bet they get a nice salary working there. (Deservedly so.)