Just reaching the top 1 percent is passe. The real place to be is a more elite top 0.5 percent — the high-earners who pay no taxes.
The club that made more than $200,000 in 2009 and paid absolutely nothing in U.S. income taxes had 20,752 members — among the nearly 4 million households with incomes above $200,000 — according to an Internal Revenue Service study.
So how do they do it?
In most cases, it’s a mix of tax breaks that combine to turn high gross incomes into negligible taxable income. That means some charitable contributions, some casualty and theft losses, some foreign tax credits and medical expenses.
The percentages of non-payers are near all-time highs, with data dating back to 1977, when the IRS started compiling it.
That’s even true if you adjust the $200,000 threshold for inflation. By that standard, 0.61 percent of high-income households didn’t pay taxes in 2009.
The 2008 and 2009 figures — 0.51 percent and 0.53 percent — were more than double the percentages of any other year in the study’s history.
The IRS report provides fodder for Democrats and their allies, who want to raise taxes on top earners.
“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,” said Frank Clemente, campaign manager for Americans for Tax Fairness, a coalition including labor unions organized last week.
