A new study based on unpublished Internal Revenue Service data shows the rich are different when it comes to paying taxes: They hide more of their income. The previously unreported study estimates that taxpayers whose true income was between $500,000 and $1 million a year understated their adjusted gross incomes by 21% overall in 2001, compared with an 8% underreporting rate for Americans earning $50,000 to $100,000 and even lower rates for those earning less. (The "net misreporting rate," as the IRS calls it, includes both underreported income and inflated deductions.) In all, because of their higher noncompliance rates, those with true incomes of $200,000 or more received 25% of all income but accounted for 40% of net underreported income and 42% of underreported tax in 2001, according to the new analysis. http://articles.moneycentral.msn.com/Taxes/AvoidAnAudit/the-biggest-tax-cheats-rich-folks.aspx
This is a surprise? For many decades this has been true. When the taxes are oppressive, the wealthy both hide their money and create tax free ways to receive it. When the tax burden is lessened, they change their ways and pay more taxes. As an example, when Regan cut taxes, more money from the rich came it...
the way it works is that wealthier americans have expert tax people do their returns for them...ones that know how to "maximize" deductions. they're not going to the H&R block, they're going to accountants that know every law and loophole and they exploit it.
Most wealthier Americans also receive a greater percentage of their income/revenue from investments rather than salary. It's easy to re-invest those profits or move them to tax free instruments and avoid paying taxes on that income for years.
I don't think this report is about taking advantage of the tax code. This is about plain old cheating. Which is indeed easier if your income comes from investments rather than wages. barfo
I wonder if they factored in all the people who work under the table and don't even reprot taxes? They say only 8% of people making 50-100 underestimate and lower percentage for people who work less. No way . . they aren't factoring in the people who don't report at all . . . which should be conuted as underestimating.
Or people who work in a cash business and just take what they want to spend out of the cash register and don't report it. Or people who get perks from their jobs, like company cars.
shitty book that provides false hopes and waaaay too easy answers without a solid warning of risks IMO. I honestly blame a lot of the housing market woes to over-eager investors who tried to use Kiyosaki's principles of leveraging debt. a lot of stupid fucking people read this too-easy-to-read book and applied the prinicples in order to get rich quick. he advocated a lot of the flipping and IMO his followers overinflated housing values.
