Monday, November 21, 2011

Billionaires avoid more than just income tax

Billionaires can pull millions out of appreciated assets in ways that allow them to avoid taxes on that cash without violating any IRS rules, reports Jesse Drucker of Bloomberg News.

The ability to avoid those taxes is an overlooked aspect of the debate over whether to increase the income tax that the wealthiest people in the U.S. should pay, the story notes.

“The problem is not that people like Warren Buffett pay tax at a 17 percent rate, it’s that they can use complex transactions not available to most Americans to get cash from their appreciated stock without paying any taxes at all,” said David S. Miller, a tax attorney and former chair of the tax section of the New York State Bar Association.