H. Ross Perot reportedly only pays income taxes at an effective rate of about 8%. How does he do it?
Thanks.
And how do you know that this “reportedly” that you mention is true? Give us a credible quote please.
Okay.
http://www.umsl.edu/~rkeel/010/econstra.html
“Ross Perot paid 8.5% on his $230 million income.”
Most likely things like writeoffs, losses, charitable deductions, etc. That page provides no source for the factoid so we don’t even know if it’s true. But it wouldn’t really surprise me.
Good tax lawyers.
If you have a low income, you have to spend it all on rent and food. The higher your income, the more you can spend in ways which attract tax deductions or tax breaks. That’s why tax breaks tend to favour the better off, and why, the more income you have after a certain point, the less of it (proportionally) you have to pay in tax.
You could avoid this effect by having no tax breaks or tax deductions, and tax all income. But this would be unpopular with the middle classes who like, e.g., tax deductions for mortgage interest. And of course it would deprive the Feds of the ability to encourage people to spend money in ways they think socially desirable, and the beneficiaries of various forms of tax-favoured expenditure (including most charities) would suffer very badly.
I agree that there are many writeoffs available to cut taxes, but I might note that the cite is full of unsubstantiated statistics of which include the 8.5% that Ross Perot paid. I take it all with a grain of salt. Seeing statistics is not believing statistics without backup proof.
When somebody runs for public office, they are required to report all of the details regarding their income. When Perot ran for president in 1992, I remember hearing the 8% figure reported in the news media numerous times.
Yep that site doesn’t even say if thats state or federal taxes…
I don’t know what taxes Ross Perot might pay, and I don’t believe all that I saw on the referenced site, but there are such things as tax-free municipal bonds. If you derived most of your income from such, I suppose your overall tax rate could be relatively low. I don’t think they are very high-yield investments, though.
If he paid 8.5% on an income of $230 million, that means he paid $19.55 million in taxes. If I were him, I’d fire my tax accountant.
Even if it’s true that the rich pay less proportionately (and I doubt it), if they do so by taking advantage of tax break offers from the government, that means they’re spending the money in a way that the govenment wants, so the government is getting use out of it, so in a sense they’re still paying taxes.