The Best Tax Day in DECADES for the RIch!

This month the rich have extra reason to celebrate - it's their best tax day in decades! DECADES! Coincidentally, since right before Reagan started the country down the road to ruin. Don't just take my word for it, tho - read these clips from other columnists:

From David Horsey, editorial cartoonist:

Over the past 30 years, as 40 percent of the nation's wealth has shifted to the top 1 percent of the population, less and less of it has been liable to taxation. The highest income tax rate, 55 percent in 1965, is 32 percent today. Taxes on capital gains and dividends have been slashed as well. Meanwhile, corporations have won a wide array of tax exemptions or have moved profits offshore.

Most of this tax cutting was done on the theory it would boost the economy, create new jobs and, thereby, increase tax revenue. Over the past decade, that theory has proved false. The benefits of growth have gone to the very rich, middle-class jobs and incomes have stagnated, and public revenue has plummeted.

Yet, in the face of gaping budget shortfalls, Republicans in state after state are handing out hundreds of millions of dollars in additional tax breaks as if they are magic beans that will sprout a gigantic beanstalk of growth.

It's a fairy tale, and we are certainly not going to live happily ever after.

This is from Jesse Drucker, Bloomberg Business Week

For the well-off, this could be the best tax day since the early 1930s: Top tax rates on ordinary income, dividends, estates, and gifts will remain at or near historically low levels for at least the next two years. That's thanks in part to legislation passed in December 2010 by the 111th Congress and signed by President Barack Obama.

"This is clearly far and away the most generous tax situation that's existed," says Gregory D. Singer, a national managing director of the wealth management group at AllianceBernstein (NYSE:AB - News) in New York. "It's a once-in-a-lifetime opportunity."

For the 400 U.S. taxpayers with the highest adjusted gross income, the effective federal income tax rate -- what they actually pay -- fell from almost 30 percent in 1995 to just under 17 percent in 2007, according to the IRS. And for the approximately 1.4 million people who make up the top 1 percent of taxpayers, the effective federal income tax rate dropped from 29 percent to 23 percent in 2008. It may seem too fantastic to be true, but the top 400 end up paying a lower rate than the next 1,399,600 or so.

That's not just good luck. It's often the result of hard work, as suggested by some of the strategies in the following pages. Much of the top 400's income is from dividends and capital gains, generated by everything from appreciated real estate -- yes, there is some left -- to stocks and the sale of family businesses. As Warren Buffett likes to point out, since most of his income is from dividends, his tax rate is less than that of the people who clean his office.

The true effective rate for multimillionaires is actually far lower than that indicated by official government statistics. That's because those figures fail to include the additional income that's generated by many sophisticated tax-avoidance strategies. Several of those techniques involve some variation of complicated borrowings that never get repaid, netting the beneficiaries hundreds of millions in tax-free cash. From 2003 to 2008, for example, Los Angeles Dodgers owner and real estate developer Frank H. McCourt Jr. paid no federal or state regular income taxes, as stated in court records dug up by the Los Angeles Times. Developers such as McCourt, according to a declaration in his divorce proceeding, "typically fund their lifestyle through lines of credit and loan proceeds secured by their assets while paying little or no personal income taxes." A spokesman for McCourt said he availed himself of a tax code provision at the time that permitted purchasers of sports franchises to defer income taxes.

For those who can afford a shrewd accountant or attorney, our era is rife with opportunity to avoid, or at least defer, tax bills, according to tax specialists and public records. It's limited only by the boundaries of taste, creativity, and the ability to understand some very complex shelters.