Do Rich People Pay Taxes,Too?

Question

Or They Get Help From Loopholes? What Are Alternative Minimum Taxes?

Answer 1

yes

Answer 2

Income tax evasion, how many times do we hear about the wealthy owing hundreds of thousands of dollars. Regularly, and homes going into forclosure too!

Answer 3

Rich people know excessive liquid capital is not wise.

Poor people with money save it in a bank or buy mutual funds.

Answer 4

Of cause they pay tax everybody does

Answer 5

Latest statistics:

Top 1% pay 37% of tax

Top 20% pay 88%

Top 50% pay 97%

This doesn't say that SOME people don't get help from loopholes, but "the rich" pay a very large % of the income taxes.

Alternative minimum tax is a tax originally meant to ensure that "the rich" can't totally escape income tax no matter how many loopholes they find.  Unfortunately, since the income level to be subject to this wasn't indexed to inflation when it was set up many years ago, it now extends down well into the middle class.  So far congress has passed a one-year law each year exempting many of the middle income people it will hit, but since there's been no permanent fix, if congress stops this every-year fix, a lot of people will get hit by it who would no way be considered as rich.

Answer 6

Rich people pay through the nose.

The AMT is a second calculation that was designed to assure people with high income paid some taxes by disallowing some deductions and taxing some income that might not be taxed.  It often hits lower income people since it was not adjusted for inflation.

Answer 7

Rich people are usually able to avoid paying taxes by doing things that are tax deductible, such as making contributions to charitable organizations, gambling, and buying government bonds.

Answer 8

By "taxes" I'm guessing you are referring to "personal income tax". People only need to pay personal income tax on their personal income.

The secret is... find lots of deductions, invest in a growth asset that does not need to pay tax as it grows (i.e realestate) or run a company and only pay tax at the company tax rate.

The trick is to educate yourself financially - and don't trust what other people say unless they can show you results. *Greed* sounds like he knows his stuff. I'd give him the best answer.

Answer 9

Yes.  In fact, the top 20% of all earners in the US pay about 80% of all taxes.  While the bottom 50% pay less than 10%.

It's a myth that the rich don't pay taxes.  There are tax breaks that are generally available only to wealthy investors (Google "retained interest" or "held interest") but they do pay the majority of all taxes in the end.

The Alternative Minimum Tax is as the name implies, an alternate way of calculating Federal income tax liability.  Technically you have to figure your tax liability both ways (with and without the AMT calculations) and then pay the highest of the two amounts.  However the AMT generally only kicks in at higher incomes so most taxpayers never have to deal with it in actual practice.

The AMT dates to the late 1960s when there were a lot of abusive tax shelters and loopholes for the wealthy.  Many high income taxpayers then paid little or no income tax.  Congress implemented the AMT to combat that situation.  The problem today with the AMT is that it was never indexed to inflation.  An annual income of $60,000 per year was nearly unthinkable for most Americans back then, however that's mid-range middle class today.  

To fight the effects of inflation, Congress has been issuing temporary patches to the AMT tables each year for some time now.  If they didn't, upwards of 20 million taxpayers would be subject to the AMT.  Some have asked why Congress doesn't simply patch it permanently or do away with it entirely.  The answer to both questions is simple politics.  When generating the annual budget, Congress has to stipulate where the revenue will come from.  They use the estimated revenue from the AMT to keep budget shortfall numbers artificially low, making the deficit look less onerous that it truly is.  When they issue the patch, that does NOT update the budget numbers though the added shortfall most certainly IS added to the deficit.

Answer 10

If your asking about the "Alternative Minimum Income Tax" (not sure by your question). The Alternative Minimum Income Tax, which is an additional tax, on top of your primary income tax, begins at $175,000 a year in income.