Sunday, April 10, 2011

Scrawny Taxes For Fat Cats?

For the Fat Cat set, this could be the best tax-paying season since the early 1930s, says this Bloomberg Business Week cover story. Not that recent years haven't been relatively easy on high incomes:
For the 400 U.S. taxpayers with the highest adjusted gross income, the effective federal income tax rate—what they actually pay—fell from almost 30 percent in 1995 to just under 17 percent in 2007, according to the IRS. And for the approximately 1.4 million people who make up the top 1 percent of taxpayers, the effective federal income tax rate dropped from 29 percent to 23 percent in 2008.
(Remember, states and cities levy taxes, too. Fat Cats aren't necessarily getting off that easy.)

The Bloomberg Business Week report highlights various strategies for deferring or reducing federal tax, including transfer taxes. The description of intentionally defective grantor trusts should stir the interest of any self-respecting billionaire.


Jim Gust said...

Why are we talking about 2007, 4 years ago? Surely there is more recent data?

Left out of the discussion, the taxes on the really super mega rich, the tens of billions of dollars in Ivy League endowments.

Taxes on Yale's investment earnings have held steady at fully 0% throughout the period.

JLM said...

And Yale should pay more to the IRS than GE because . . . ?

Jim Gust said...

Because I do.

I'm not certain how GE got their tax rate down to zero, but it wasn't through an outright exemption from tax on investment earnings.

I'm willing to let donors get their tax deductions for donating to Yale (even though, according to the liberal construction, Yale doesn't "need" those donations). I'm willing to let them be a tax-exempt organization with respect to their educational mission. That much tax subsidy is enough. They should pay property taxes to New Haven, and there should be no subsidy on the investments earnings from the accumulated endowment.

That is, if you actually care to tax the rich.