Thousands live tax-free in the top brackets

New York Times News Service

About one in every thousand Americans who earned more than $200,000 in 1999 paid no income tax, despite a 1969 law intended to prevent tax-free living, new data from the IRS shows.

In an annual report on high-income people who pay no taxes, the IRS said that almost 2.5 million Americans reported an adjusted gross income of at least $200,000 in 1999, putting them in the top 2 percent of all taxpayers. (Adjusted gross income is the last line on the front page of a Form 1040 tax return.)

Within that group, 2,525 individuals and married couples paid no federal income tax. These taxpayers had an average adjusted gross income of $389,000 each, according to the spring 2002 issue of the Statistics of Income Bulletin, which the IRS released this month and where the 1999 annual report appeared. Of those nontaxpayers, 2,174 paid no tax anywhere in the world.

Overall, the $200,000-plus income group had an average income of $580,000 each and paid, on average, 26.5 percent of their adjusted gross income in federal and foreign income taxes, the IRS found.

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