Billionaires are paying an even lower marginal rate than previously thought.

Bloomberg News/Businessweek’s Jesse Drucker makes an astute observation about how billionaires either delay or escape income taxes in his article “U.S. Billionaires Avoid Reporting Cash to IRS.”  The article describes how several people on the Forbes 400 list have used sophisticated and complex transactions to characterize the cash that they receive from the sale of capital assets as something other than taxable income.  Transactions similar to those described in the article are often misused to artificially create a tax benefit, allowing billionaires to engage in tax alchemy to recharacterize what should be taxable income into something else.