How do the rich avoid or reduce their taxes?

Question

taxes from their jobs or investments

Answer 1

You don't AVOID them...not legally, anyway! But through the use of deductions, and even raising your expenses in an effort to reduce your overall income in a business, it is possible to reduce your taxes significantly. And it's all perfectly legal.
You can even create a second business who's sole purpose is to operate at a LOSS, so that it can also lower your overall income. The lower your income, the less you're taxed. And believe it or not, that's legal too!

Answer 2

A few means:

1) Captial Investments -- Profits from investments in capital assets that are held for longer than a year are taxed at a lower rate then ordinary income. For example, if you purchased a capital asset, and are not a dealer in that asset, the current tax code would tax your profit on the sale of that asset at a maximum of 15% (or a 28% for some types of assets). Thereby, one can make money by investing and get the return on that investment at a lower rate -- and any losses that are taken on capital investments offset the gains. So if you made $10000 on capital investment A, and lost $6000 on investment B, you would be taxed on the $4000 of total gain.

2) Municipal bonds -- Interest gained on certain types of municipal bonds is not taxable (at least federally). By this method, it's an incentive to invest in municipal bonds (which help cities and states) even though they have a lower rate of interest, because the net profit from these investments would not be taxed, and one would earn more than a higher-yield investment whose proceeds would be taxed at an ordinary income rate.

3) Various personal and business deductions -- If one has more deductions than the standard deduction, one can itemize the deductions, which then remove those amounts from one's income for the year. One of the biggest of these is the mortgage interest deduction. Though one is paying mortgage interest, the deduction for the money paid as interest is sizable (especially if one pays a lot of mortgage interest in a year) Effectively, the government is subsidizing personal mortgage interest to an extent (though it is being taxed to a certain extent, but it is the mortgage lender that is paying the tax on the profits)

Answer 3

Well - they do not "avoid" them - rich people (and rich corps) pay the vast majority of all taxes in this country.

As you can see from the supplied source - if you split the nations income earners in half - the top half pays over 96 percent of the total income tax collected - the top 1 percent pays almost 37 percent of all income taxes collected.

The second 50 percent pays in total about 3.4 percent of all taxes collected.

Just like anyone else that pays taxes, they take advantage of anything the law allows them to use to lower, or defer the payment of their taxes.

But the idea that they "avoid" taxes is completely false - if they did - there would be no tax revenue in this country.

Answer 4

Well I have all my money and property overseas. Lot lower tax rate. Also have the bank account in wifes name so no U.S. taxes on it.

Answer 5

They hire highly paid accountants and tax lawyers.

Answer 6

well may be by putting accounts , etc in the names of their wives,children,etc.