On Taxes and the lack thereof

Adrian Hunter commented this on this facebook post: http://www.facebook.com/bsnowden2/posts/182435675138204?notif_t=share_reply

A major complaint is so many don’t pay any Income Tax. The uninformed think that means low income people. But here is reality - due to the gwb gift to the wealthy, for 2011 a couple could have had $86,700 of dividends (at the S&P average dividend rate that is over $5million in stock) and their income tax would be ZERO.

To compare - if that married couple's $86,700 income was wages, their 2010 federal income tax would be $9,369 (no kids, standard deduction)- and they would have paid another $6,633 in social security & medicare taxes.

So on the same amount of income - the couple with $5million of stock pays ZERO, while the working couple pays $16,002.

The above is from an accountant friend of mine.

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So, I went to look this up.

When in doubt about taxes, don't go to the so called think tanks, who often times are financed by groups with personal involvement. As everyone pays taxes, every think tank is financed by someone with a personal involvement.

So who do you go to? One source: http://www.irs.gov

The Internal Revenue Service website is not the cleanest, but it has everything you'd ever need to or want to know about our tax code on there. It is their job, after all. The relevant document this time is: http://www.irs.gov/pub/irs-pdf/p550.pdf

It looks more daunting than it truly is. If you break it down, Adrian's accounting friend is 100% correct. A person with $5 Million in stock holdings can live tax free. And, with other accounting processes, can even hold more, through things such as dividend reinvestment.

This seems a tad unfair, especially when we are discussing budget cuts which would harm our economic system itself. Why should I work my tail off to let someone sit on their butt and collect checks for not working?