An astounding report was released last week by the I.R.S. showing hundreds of billions of dollars in uncollected tax revenue annually.
"People and businesses underpaid their taxes by an estimated 17 percent in the most recent year studied, meaning they failed to send the government $450 billion it was owed, according to an Internal Revenue Service report released Friday.
The study covered 2006, the most recent for which the IRS said it had data available. The amount of underpaid taxes far exceeded the size of the entire federal budget deficit at the time." EMPHASIS OURS
There is no excuse for the extreme austerity measures and budget slashing that so many of our leaders are attempting to impose upon our struggling nation. The money is there. The problem isn't spending. It's not even necessarily the obscenely low tax rates our richest citizens enjoy. The crisis lies in enforcement.
Bruce Bartlett notes:
"There is more noncompliance in areas like pensions and investment income, where there is reporting but generally no withholding. Noncompliance rises as reporting requirements weaken for things like alimony and capital gains and rises sharply where reporting requirements are nonexistent, such as for proprietors’ income, rents and royalties." EMPHASIS OURS
Get it? The wealthiest among us, whose tax rates are ludicrously low as it is, aren't even paying what they owe.
Linda Douglas reports for ABC:
"The number of audits has gone down," says Rep. Earl Pomeroy, D-N.D., of the House IRS Oversight Subcommittee. "I think that as much as anything is giving fuel to this notion that 'I can cheat, no one will ever know ' "
Experts say the number of audits has dropped as Congress has demanded the IRS be more consumer-friendly: The agency has been pressured to devote more resources to answering questions and to use less aggressive tactics to enforce the law."
What we are dealing with here is nothing short of an institutionalized incentive for fraud.