Wealthy Americans Still Escaping Tax Bite Despite Changing Rules

Despite repeated government efforts to close loopholes, some wealthy Americans are still able to scrape together enough deductions to avoid paying any U.S. income tax, the Internal Revenue Service said today.

Of 557,848 couples and individuals who reported income of $200,000 or more on returns filed in 1988, 472--with total income of $211 million--paid no income tax. Two of them, both unidentified, even reported receiving unemployment compensation.

Of the high-income people who paid taxes, about 9,300 paid less than 5%. Another 17,082 reduced their liability to less than 10%--about the same as that of the average $35,000-a-year family.

In its annual report on the tax liabilities of high-income people, the IRS said two-thirds of those with income of $200,000 and up reported capital gains--profits from the sale of investments--that averaged $284,814. By comparison, salaries averaged $264,331.