Tax dodging in the US

Tax dodging in the US

How many rich Americans avoid paying tax? More than you think.

According to the latest report from the Internal Revenue Service, there were 3.9 million households that reported an adjusted gross income of $200,000 or more in 2009. But 20,752 of them did not pay any tax at all.

How is that possible? It's all about deductions. More than one third of the non-tax payers deducted non-reimbursed employee expenses. Other big deductions are charitable contributions, medical expenses and loses related to a small business.

Tax will be front and centre in this year's election campaign. The Obama Administration has put forward a proposal commonly referred to as the "Buffett Rule", named after billionaire investor Warren Buffet. Under this proposal, the filthy rich would have to pay a 30 per cent tax rate regardless of any deductions or incentives. And this sort of report provides ammunition for Democrats and their supporters seeking to overhaul the system. "We need to reorient our whole system so it's much fairer to those folks who are working at the wage level and haven't benefited from this tremendous increase in income which happened at the top end of our economy," Frank Clemente, campaign manager for Americans for Tax Fairness, a coalition including labour unions, told Bloomberg.

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