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September 7, 2016 5:50 AM Age: 4 yrs

This Will Tax Your Mind: $406 billion!

Category: AC - Billboard, AC RSS, A/F News, CM News, ERM Commentary & Opinion, ERM News, A/F Commentary & Opinion, CM Commentary & Opinion, GPG News, GPG Commentary & Opinion
Source:  Larry Checco, featured commentator

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That’s what the Internal Revenue Service (IRS) estimates the “tax gap,” namely the amount of taxes owed that went uncollected between 2008 and 2010 to be—per year!

Most of the gap – $387 billion, or 84 percent of the yearly gross amount – comes from taxpayers underreporting income, according to the IRS.

Here’s another sobering figure.  The net tax gap of $406 billion each year is about 2.8% of Gross Domestic Product (GDP), which, if nothing changes, would be equivalent to $6.5 trillion over the next decade. 

A trillion here, a trillion there, and before you know it we’re talking real money!

Yet our lawmakers get their knickers in knots over funding programs like Head Start (approximately $8.5 billion In fFY‘15), SNAP, commonly known as food stamps ($74.1 billion in FY ‘14), and an F-35A fighter jet (a mere $85 million when purchased in 2018 and delivered in 2020).

We can afford what we need.  What we cannot afford is our current tax code and the attitude many have towards paying taxes.

Financial guru Warren Buffet famously said that it is patently unfair that his secretary should pay a higher percentage in taxes on her secretary’s salary than he does on his billions in “unearned”, meaning passive or investment, income.

Then there is Donald J. Trump who also claims to be worth billions. In May of this year, in an interview with ABC’s Good Morning America, DJT proudly said, “I fight hard to pay as little tax as possible.”  And as always, he fights to win.

According to a May 21 Washington Post article, records show that in 1978 and 1979, while maintaining his famously lavish lifestyle, the current presidential candidate paid nothing, nada, zilch, zippo in federal taxes.  Who knows what his more recent tax returns—which he so far has refused to make public—would show?  But that’s another issue.

This is not an indictment of The Donald, far from it.  DJT is simply fortunate enough to exist in that rarified economic stratum that can afford high-priced lawyers and   accountants who exploit every conceivable tax loophole available. It’s called tax avoidance, and if done properly, is perfectly legal.

Problem is that 99 percent of taxpayers don’t travel in that high-flying economic stratum.  Subsequently many resort to underreporting their taxable income to make up for what they perceive as the unfairness in our tax system.

That’s called tax evasion, and it’s illegal.  However, the risk of being penalized for underreporting continues to decrease as congress continues to reduce the IRS’s budget.

Since 2010, the IRS budget has been cut by 17%, after adjusting for inflation, according to the Center on Budget and Policy Priorities, in essence weakening the IRS’s ability to enforce the nation’s tax laws and serve taxpayers efficiently.

Combine the perception of unfairness with the perception of less IRS audit capabilities—both of which are more reality than perception—and what we end up with is hundreds of billions of dollars in unpaid taxes.

Then there are those who, regardless of the tax code, have the attitude that not paying taxes is somehow actually beneficial.

“If we kept our earnings [in lieu of paying taxes] we could invest in the things that actually improve our lives, like houses, cars, education, health care, travel etc.” is a comment I recently found on the internet.

So, who would this individual, and others like him or her call if their house were on fire, or if they were having a heart attack and needed emergency care?  Donald Trump?

Moreover, should those of us who do pay our fair share in taxes allow those who don’t to drive on our roads, send their kids to our public schools, drink our clean water, breath our clean air, find justice in our judicial system, holiday in our public parks, seek government assistance should they be afflicted by a natural or man-made disaster?

Should we allow them to take part in our Social Security and Medicare/Medicaid programs, or drive cars, use appliances or make financial investments made safer by government oversight? Who will keep their neighborhoods safe, and patrol their streets and borders, let alone protect them from international bad guys?

In full disclosure, I’m not overjoyed come April 15, when I pay my taxes.  But I’m happier living here in the U.S. than in Greece, where tax evasion is pandemic and underserved citizens riot in the streets!

And I’d be elated if Congress enacted progressive tax reform so that my middle-income tax dollars would no longer subsidize those who live in penthouses and fly around in their private jets and helicopters, yet evade or avoid paying their fair share—especially if they want to be president of these United States

Content Copyright © 2016 by Larry Checco - All Rights Reserved


Published by: Corporate Governance & Accountability Advisors, Inc. Content & Concepts ©2008 by CG&AA, Inc. All rights reserved