High Income No Taxes (HINTs)

DEFINITION of ‘High Income No Taxes (HINTs)’
“HINT” is an acronym that stands for for “high income no taxes.” It is applied to high-earners who avoid paying federal income tax through legal means.

HINTs have become more numerous in recent years, generating resentment that has found a focal point in Donald Trump. The New York Times reported in October 2016 that Trump may have avoided paying federal income tax for up to 18 years by booking a $916 million net operating loss in 1995. The Republican presidential candidate appeared to confirm that he had carried that loss forward in a debate later that month.

BREAKING DOWN ‘High Income No Taxes (HINTs)’
According to the investigative reporter David Cay Johnston, 10,900 households making over $200,000, or around 0.2% of the 6.2 million households that comprise this group, paid no federal income tax in 2014. That is nearly double the level in 2002, when 5,650 “high-income taxpayers” – the IRS’ term for those earning over $200,000 – avoided federal income tax. Johnston notes that, since this earnings threshold is not adjusted for inflation, the comparison is not perfect (according to the BLS’ CPI inflation calculator, $200,000 in 2002 equals the purchasing power of $151,984 in 2014).

Avoiding federal income tax is slightly less common higher up on the income ladder, but still occurs among households earning over $1 million per year. Of 410,300 such households in 2014 – whose average income was over $3.3 million – Johnston calculates that 444, or 0.01%, paid no income tax.

 

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