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How 21,000 Wealthy Americans Avoided Paying Income Tax

dmcowen674

No Lifer
Oct 13, 1999
54,912
46
91
www.alienbabeltech.com
6-1-2012

http://news.yahoo.com/big-paychecks-tiny-tax-burdens-21-000-wealthy-100029578--abc-news-politics.html

How 21,000 Wealthy Americans Avoided Paying Income Tax


The richest woman in Wisconsin, Diane Hendricks, is worth an estimated $2.8 billion, but she did not pay a dime in state income tax in 2010


Because of a change in how her company, ABC Supply Inc., the country's largest distributor of roofing, windows and siding, is structured, Hendricks reduced her personal state income tax burden from $2.3 million in 2009 to zero in 2010

While a tweak in ABC's corporate structure allowed its CEO to get out of state income taxes, a complex web of deductions and exemptions in the federal tax code have allowed more than 20,000 wealthy tax filers get off the hook on paying federal income taxes.

In 1969, Congress was so up in arms about a mere 155 individuals who earned more than $200,000 and paid no income tax that it passed the Alternative Minimum Tax, which aims to prevent wealthy people from claiming too many tax exemptions and deductions.


More than 40 years after the AMT went into effect, the number of wealthy, income-tax-free individuals has ballooned to 133 times as many as the 155 that inspired the new tax.

In the 2012 battle for the White House, President Obama has made taxing these wealthy Americans a cornerstone of his re-election campaign.
Under Obama's tax plan, the Bush tax cuts would expire, raising taxes for married couples earning more than $212,300 by 3 percentage points.



Obama also plans to enact the "Buffett Rule," which creates a minimum tax rate of 30 percent for millionaires.


Mitt Romney takes a virtually opposite approach to tax reform for the wealthy.


His plan not only extends the Bush tax cuts, but further reduces tax rates at all income levels by 20 percent, which puts the tax rate for those making more than $200,000 at about 28 percent. Romney ardently opposes instituting a minimum tax for millionaires, such as the Buffett Rule.


Under Obama's plan, the top 1 percent of income earners would see their taxes go up about 5 percent. Under Romney's plan, they would go down by nearly 8 percent, according to an analysis by the Tax Policy Center.

And as for the 21,000 wealthy Americans who currently pay no income tax, Williams said, "Under Obama's plan, these people would almost certainly pay more. Under Romney's, they will almost certainly pay less."

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Fortunately many of these America haters are leaving the country.

6-1-12

http://finance.yahoo.com/news/number-u-millionaires-declines-2-174100310.html?l=1

Number of U.S. millionaires declines 2.5%

No wonder Facebook's "co-founder Eduardo Saverin moved to Singapore.

He just wanted to be with people like himself.


According to Boston Consulting Group's annual study of global wealth trends, Singapore is home to the greatest concentration of millionaire households in the world. More than 17% of households there have private wealth of $1 million or more.

The number of U.S. millionaire households fell 129,000, or 2.5%, in 2011 to 5,134,000.
 
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PokerGuy

Lifer
Jul 2, 2005
13,652
199
101
And as for the 21,000 wealthy Americans who currently pay no income tax, Williams said, "Under Obama's plan, these people would almost certainly pay more. Under Romney's, they will almost certainly pay less."
LOL, fail. So, under Romney's plan they will almost certainly pay less.... than zero?? What an idiot.

The truth is that under obummer's plan EVERYONE will pay more, but they like to pretend that it's just socking it to "the rich" and then change who is "rich" whenever they want to raise more taxes.
 

Exterous

Super Moderator
Jun 20, 2006
19,195
2,042
126
In Hendricks' Wisconsin case, ABC Supply switched from an "S" corporation, which passes all of its profits and losses through its owner to be taxed under personal income, to a "C" corporation, which stands independently of its owner and whose income is subject to corporate taxes.
Uh...this is not a 'tweak' and - based on my understanding - makes this a FUD article. Under the S corp rules she and she alone would be responsible for paying the taxes for the company. Thus the $2.3 million in taxes for 2009 were taxes for herself AND ABC Supply. Now that the company is an S corp the company pays taxes on the company's earnings and she just pays taxes on her income.

At no point does the article report on her actual earnings for 2010 so we don't know if she truly 'skipped out' on paying income tax because we don't know what her income was!
 
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Exterous

Super Moderator
Jun 20, 2006
19,195
2,042
126
This article flies in the face of every Republican in here that spews daily that the job creators pay taxes.
Yep - they don't pay taxes at all :colbert:

Bianchini noted that while Hendricks' tax burden was minuscule this year, the billionaire has paid more than $10 million in taxes since 2005
 

PokerGuy

Lifer
Jul 2, 2005
13,652
199
101
Uh...this is not a 'tweak' and - based on my understanding - makes this a FUD article. Under the S corp rules she and she alone would be responsible for paying the taxes for the company. Thus the $2.3 million in taxes for 2009 were taxes for herself AND ABC Supply. Now that the company is an S corp the company pays taxes on the company's earnings and she just pays taxes on her income.

At no point does the article report on her actual earnings for 2010 so we don't know if she truly 'skipped out' on paying income tax because we don't know what her income was!
Shush, don't you dare bring logic into the discussion when clearly there's a need for more pitchforks and rhetoric against the evil rich! ;)
 

zanejohnson

Diamond Member
Nov 29, 2002
7,048
7
81
as i and anyone out there whos ever used a CPA for taxes knows... anyone making any sort of money.. doesnt pay taxes lol...

i know this, we know this.. c'mon..

shit i remember times my cpa MADE UP CARS that i supposedly used for work ROFL...

than, pay myself a salary just under the minimum amount your required to pay taxes on...something like 17k... oh the beauty of LLC's as well...

LET THEM EAT CAKE.
 
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jackstar7

Lifer
Jun 26, 2009
11,679
1,941
126
The truth is that under obummer's plan EVERYONE will pay more, but they like to pretend that it's just socking it to "the rich" and then change who is "rich" whenever they want to raise more taxes.
You mean like a shared sacrifice? To deal with the larger complex financial problems we face?

Sounds pretty reasonable.
 

Jhhnn

No Lifer
Nov 11, 1999
61,747
13,866
136
You mean like a shared sacrifice? To deal with the larger complex financial problems we face?

Sounds pretty reasonable.
The only financial problem facing America's wealthiest is that they can't make enough money off the rest of us to suit their ambitions. That's because the majority of us basically don't have any, other than what they lend us. They're stuck making money off each other in various forms of gambling, like synthetic derivatives.
 

ichy

Diamond Member
Oct 5, 2006
6,940
6
81
The person in the article may not have paid any income tax but it conveniently avoid mentioning how much her company paid in in corporate taxes or how much she paid in dividend taxes (which are different from income tax.)
 

Corn

Diamond Member
Nov 12, 1999
6,389
29
91
as i and anyone out there whos ever used a CPA for taxes knows... anyone making any sort of money.. doesnt pay taxes lol...

i know this, we know this.. c'mon..

shit i remember times my cpa MADE UP CARS that i supposedly used for work ROFL...

than, pay myself a salary just under the minimum amount your required to pay taxes on...something like 17k... oh the beauty of LLC's as well...

LET THEM EAT CAKE.
You and your CPA should be in prison and you're a fool for admitting to this criminal behavior in a public forum.
 

CycloWizard

Lifer
Sep 10, 2001
12,353
1
81
Math fail. "While a tweak in ABC's corporate structure allowed its CEO to get out of state income taxes, a complex web of deductions and exemptions in the federal tax code have allowed more than 20,000 wealthy tax filers get off the hook on paying federal income taxes." 20,000+1 != 21,000.

The more crap you throw in the tax code to try to catch every dollar from falling through the cracks, the more small cracks you have that dollars will fall through.
 

BoberFett

Lifer
Oct 9, 1999
37,587
9
81
Democrats don't want a simple tax code. They want to do their social engineering via the US tax code. This is what you get. Blame the Democrats.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,599
5
0
What did the company pay in taxes?

Answer that before casting stones
 

ichy

Diamond Member
Oct 5, 2006
6,940
6
81
Democrats don't want a simple tax code. They want to do their social engineering via the US tax code. This is what you get. Blame the Democrats.
Both sides are guilty of this. If you tried to get rid of the mortgage interest tax deduction you can be certain there would be just as many Republicans shitting their pants.
 

dank69

Lifer
Oct 6, 2009
26,896
7,330
136
Math fail. "While a tweak in ABC's corporate structure allowed its CEO to get out of state income taxes, a complex web of deductions and exemptions in the federal tax code have allowed more than 20,000 wealthy tax filers get off the hook on paying federal income taxes." 20,000+1 != 21,000.

...
...
 

Ninjahedge

Diamond Member
Mar 2, 2005
4,148
1
76
NOBODY wants a simple tax code.

Under Obama's tax plan, the Bush tax cuts would expire, raising taxes for married couples earning more than $212,300 by 3 percentage points.
Um, that ain't "raising" taxes. That is just letting a CUT EXPIRE, but still, it is meaningless.

The burden has been shifted primarily to the middle class. Not he Have's or Have Nots, but the Have Some's. Tax shelters, corporate management, stock options and the like are not available to the FAMILY earning even up to $300K/yr.

Hell, look at the COL once you get within 20 miles of NYC and tell me what constitutes "well off". I am worried about my own ability to pay mortgage and any repairs if/when my wife takes Maternity leave, and I ain't working at Taco Bell!

The problem is simplicity. Too many years of special exceptions has made the tax code something where outdated incentives and unequivalent tax brackets and limitations thrive to the delight of CPA's everywhere.

Why is it that a millionaire can't put $5000 a year into ROTH? Why the hell does it matter? Why are some of these mechanisms that encourage fiscal prudence are hindered by so many conflicting standards that it is necessary for a person to hire someone to tell them how to keep a fraction of it?

And then, as an example, a BILLIONAIRE is sited as paying $10M over the past 7 years.

Lets say he only has $1B.

$10M/7yrs/$1B = 0.143% of net worth. Hell, depreciation by stuffing it in your mattress is more than that. Waah! I have more money and they are charging me more for it?

Lets try more math.

I put $1B into treasury bills. At ~2% I earn $20M per year for doing nothing. (And you know how many billionaires do nothing with their money, right?)

$10M/$20M/7years = 7 frigging percent.

My total, at significantly less $ than that, is upwards of 28% federal.

At this point I would be happy if the 0.1% would pay the SAME % as I do, unilaterally, rather than all this political dancing around justifying XYZ "for the greater good". :p
 

sactoking

Diamond Member
Sep 24, 2007
6,845
1,611
136
There's one thing you can always count on with sensationalist journalism: it's always light on facts.
 

CPA

Elite Member
Nov 19, 2001
30,324
4
0
This article flies in the face of every Republican in here that spews daily that the job creators pay taxes.
How? Her company pays income taxes, pays franchise taxes, pays unemployment taxes, pays FICA taxes, and pays property taxes.
 

CPA

Elite Member
Nov 19, 2001
30,324
4
0
Uh...this is not a 'tweak' and - based on my understanding - makes this a FUD article. Under the S corp rules she and she alone would be responsible for paying the taxes for the company. Thus the $2.3 million in taxes for 2009 were taxes for herself AND ABC Supply. Now that the company is an S corp the company pays taxes on the company's earnings and she just pays taxes on her income.

At no point does the article report on her actual earnings for 2010 so we don't know if she truly 'skipped out' on paying income tax because we don't know what her income was!
The article is obviously a hit piece. An S-Corp has been around for ages. And don't you love the timing - days before the Wisconsin Governor recall election. Liberal media at it again.

Dave, did you know that a married couple could have one person working full-time at a company and one person own a sole-proprietorship, and use the losses of the sole proprietorship to offset the income of the full-time spouse. If you do it right, you pay no federal income taxes. Should we ban Sole Proprietorships?
 

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