Skip to content Skip to footer
|

Billionaires Use Tax Loophole to Lower Their Tax Rates to One Percent

In 2009, 1,470 households reported income of more than $1 million but paid no federal income tax on it, through their use of various tax loopholes and shelters. Tax rates for millionaires have fallen by 25 percent since the mid-’90s, while one quarter of millionaires currently pay lower tax rates than the average middle-class household. Fight corporate influence by keeping independent media strong! Click here to make a tax-deductible contribution to Truthout.

In 2009, 1,470 households reported income of more than $1 million but paid no federal income tax on it, through their use of various tax loopholes and shelters. Tax rates for millionaires have fallen by 25 percent since the mid-’90s, while one quarter of millionaires currently pay lower tax rates than the average middle-class household.

Fight corporate influence by keeping independent media strong! Click here to make a tax-deductible contribution to Truthout.

Numbers like these are the driving force behind the Buffett rule, the administration’s proposal aimed at ensuring that millionaires can’t pay lower tax rates than middle-class families. To add to the pile of evidence that such a rule is necessary, Bloomberg News ran a segment today on billionaires who manipulate the tax code to lower their tax rate all the way down to one percent:

Warren Buffett became the de facto face of the effort to increase taxes for the nation’s wealthiest when he proclaimed his secretary had a higher tax rate than he does, his being 17 percent. But the real figure for billionaires is often a lot smaller than that. Sometimes they even have a tax rate as low as 1 percent.That’s because they derive the bulk of their income from stock appreciation, and they use complicated strategies — some of them — to make sure those gains don’t get classified as taxable income. Basically what they do is enter into transactions known as “variable pre-paid forward contracts” and it can enable them to defer paying capital gains tax until a later date…Much of the wealth never converts into income on a tax return.

Watch it:

The tax code is full of provisions that help the very wealthy, like the pernicious carried interest loophole or the preferential treatment of investment income. And the end result is a tax code that advantages the 1 percent over the 99 percent.

We’re not going to stand for it. Are you?

You don’t bury your head in the sand. You know as well as we do what we’re facing as a country, as a people, and as a global community. Here at Truthout, we’re gearing up to meet these threats head on, but we need your support to do it: We must raise $50,000 to ensure we can keep publishing independent journalism that doesn’t shy away from difficult — and often dangerous — topics.

We can do this vital work because unlike most media, our journalism is free from government or corporate influence and censorship. But this is only sustainable if we have your support. If you like what you’re reading or just value what we do, will you take a few seconds to contribute to our work?