Did you read the article? The article refers to the "The top 0.1 percent" who are "average income of $9.44 million". The article specifically refers to the top 0.1 percent. Why? because in theory they should pay taxes like the top 10 percent, but they don't. Many of top "0.1 percent" use creative tax accounting to avoid paying their share.
That you can use "creative tax accounting" to avoid paying your share hasn't been true for decades due to the AMT. The onus is really on you to explain what you mean, or cite a source here.
There's a curve - up to perhaps $0.5-1m / year, it's not really feasible for most people to structure hyper-cleverly to avoid taxes. But after that, you can start to afford the extra lawyers and accountants (and corporate structures) to cut the rate back down by shifting everything to LTCG and having the corporate side of things cover little things like your private plane. :)
It's not really about being able to "afford lawyers and accountants." It's about our system preferentially taxing investment income on purpose. Some of those lawyers and accounts themselves make millions a year and pay 40%+ in income taxes, and there is little they can do to reduce that number because it's labor income.
You might be surprised - for example, a very-well-compensated trial lawyer can avoid substantial amounts of tax (and convert it into LTCG) by creating an offshore-registered captive insurance company: http://www.jdsupra.com/legalnews/tax-reduction-and-deferral-...
It's expensive to set up & maintain one of those, so it's not worthwhile in the sub-$1m/year regime.
"As part of an asset protection plan, captive insurance helps shield your business while working to reduce your insurance costs. It can even help you save up to $1.2 million a year free of income tax. "
(I love the "oh, and by the way, there might be this other little benefit, though we know you're just doing it to reduce insurance costs" tone of that one. :)
> Some of those lawyers and accounts themselves make millions a year and pay 40%+ in income taxes, and there is little they can do to reduce that number because it's labor income.
Lawyers and accountants making that much are generally not doing it all (or even mostly) as what is, for tax purposes, labor income; they are doing it by owning (or co-owning) a firm through which the work is done, taking a much smaller salary as labor income, with the rest being the firms income which, if extracted, is extracted as tax-favored capital income (depending on the particular form of firm and method by which the value is extracted, this could be taxable dividends or LTCG, which are both tax-favored but have different exact tax treatment.)
Compare the AMT with social security and the top really pay nex to noting in taxes. Donate to charity and you still need to pay every single cent of Soxial Security income tax. Only tax break is to just make more money when it suddenly stops.
No you don't. It has built in welfare so for example a married couple gets more from Social Security than a single person. Blind from birth? You to can get a social security check.
Remember, there was no investing. Year 0 people got welfare without paying anything in and now wealthy people get to dog a welfare tax by saying it's not our problem.
How much is Jeff Bezos's share of Amazon worth? And how much income tax has he paid on it, or will ever pay on it? AMT doesn't touch that, and never will.
Note also that this source includes corporate, estate and payroll taxes as well as income taxes, while your source looks only at income taxes. The top 0.1% pay 35.7% effective tax rate, the top 10% to the top 5% pay 20.3%, and the bottom 10% pay 3.1%.
Once again, the claim isn't about the tax rate, the claim is about the top 0.1% using creative accounting to dodge their tax rate. The sources you provide does not refute that. The parent article is very specific about making the claim that the top 0.1% are dodging their tax rate and getting away with it.
