Why do some high-income individuals not pay any taxes at all?
High-income earners pay a large proportion of federal taxes. For example, in 1994, those with incomes above $100,000 (about 2 per cent of filers) received 15 per cent of total income, but paid 21 per cent of total federal tax. A few high-income earners may not pay income tax in a particular year by claiming legitimate deductions and credits. In 1994, for example, 290 individuals out of 54,000 taxfilers with incomes above $250,000 did not pay tax in that year. Deductions and credits which are available to all taxpayers may result in the elimination of tax liability for some individuals. For example, a taxfiler earning a large income from one source may incur a loss from an unincorporated business, give a large charitable donation and save for his retirement, thus ending up paying no tax in a particular year. It should be noted, however, that while an individual may be non-taxable in one year, this is not generally the case in preceding and subsequent years as non-taxability typically re
