The percentage of U.S. taxpayers reporting adjusted gross income exceeding $200,000 who paid no U.S. income taxes increased in 2009 to 0.53 percent from 0.51 percent, meaning that one in 189 high earners avoided taxation, an Internal Revenue Service study found. The filers reported tax-exempt interest along with deductible charitable contributions, medical expenses and other items to legally reduce their taxable income. Some avoid the alternative minimum tax, which was created in 1969 in response to a report that 155 people earned $200,000 and paid nothing in taxes. "High-income returns are more often nontaxable as a result of a combination of reasons, none of which, by itself, would result in nontaxability," the IRS wrote in a report released May 25.
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