What she says is not true. The largest tax cheats are average middle class Americans and small businesses that deal with cash sales.
It’s nice to think the tax cheats are the wealthy creating the false impression that’s how they became wealthy. But sad to say, it’s us not them.
The fact that we have a government that does not know simple math is a big problem. We cannot continue to under tax the citizens and add more debt to the balance sheet. We need a whole new system to collect revenue to fund the government. A federal sales tax could provide the needed revenue and there would be no cheating. But it will never happen. Because so much money is made preparing corporate and individual tax returns and benefiting from the deductions is loved by all.
In 1980 with $8,100 of income I paid $570 in federal income tax, at 17% tax rate, $47.50 per month.
Inflation adjusted = $31,584 income $2223 in tax $185.25 per month.
My total retirement income in 2022 was $39,780. Federal taxes owed ZERO.
I made it ok way back in 1980 paying federal taxes and would make it ok today paying $185.25 per month, but I like most people are only going to pay what the government asks.
Senator Warren and many others make no distinction between those who fail to pay taxes owed, and those who exploit “loopholes” in the tax laws Congress has created in order to legally reduce their tax liability. If she believes the “Billionaires”, or any other taxpayers are “Cheats who are getting away with not paying taxes they legally owe”, then she ought to inform the IRS of their criminal activity. If her real concern is that wealthy taxpayers, or more accurately, high income taxpayers, are not paying enough in her opinion, because they are taking advantage of loopholes, then she can vote to change the tax laws. These are two different things.
I have no idea how many actually cheat. I assume most people of all income groups are honest and do not knowingly break the law. Of those who do cheat on their taxes, I would imagine the majority are in the lower income groups, but that is only because that is also where most of the people are. I also suspect that the average dollar amount involved per perpetrator is much larger among those in the higher income groups.
I assume that Senators Warren and Sanders are sincere in their worry about citizens at the bottom of the wealth and income groups. They might be taken more seriously by some of us in the higher income and wealth strata if they avoided divisive rhetoric and making accusations of criminal behavior. It really is possible to eventually become wealthy while treating others ethically and without breaking the law!
I have not read “The Myth of American Inequality” by Gramm, Ekelund and Early. Reviews and articles referencing this book suggest that if all taxes and tax transfers are taken into account, the degree of income inequality in our nation is not greater now than it was in the past. I am not an economist, and people much smarter than I probably have opposing views on that conclusion, but it would seem that the gap between those at the top and those at the bottom would be less after making these adjustments. But, most arguments in the public square are based on a soundbite, which may be true, false, or incomplete and almost never with appropriate context. But tempers will flair, people will weigh in, and no minds will be changed.
The rhetoric by Warren and some others is not helpful and creates unnecessary division in the country. The fact is if you want to collect more tax you’ll have to go to the top of the heap to collect more unrecognized tax dollars. Yes, the small potatoes crowd may owe a few thousand in many cases but hiring a multitude of $100000 per year agents to collect it makes no sense.
Whether factual or not the purpose behind Warren’s rhetoric is to whip up the emotions of the ever-growing “poor class”. Like most politicians – in both parties – it’s all about badmouthing the opposition. It’s the only headlines that she and so many other lifetime pols can get.
When did being wealthy become such a bad thing in this country? It’s what everyone wants for themselves.
When did being poor become such a bad thing “in this country”?
(See the graphs below, please.)
The more I read, the more I am convinced that, in most cases, the poverty is through no fault of their own.
That very thin black line at the bottom is half the country. I know a lot of these people. I’ve worked beside them. I am not far removed from them, if at all.
1. They inherently deserve a reasonable level of income.
2. We need them as much as they need us, it would benefit all of us for them to survive and even prosper.
3. We can damn well afford it.
It is not socialism.
You’re right, it’s not socialism, it’s communism… “from each according to their means to those according to their needs”
If Warren really cared about the “Ever growing poor”, she would put a stop to importing them illegally, as the competition with native poor suppresses wages.
Half of unpaid taxes are due to the top 5 percent of earners.
Maybe some of the freebie government programs should go away. You can put Bernie a close second place as a terrible politician.
There may be a few hundred tied for second place.
Except… There’s a difference the largest number of evaders and the largest dollar amount of evasion.
“…the top 1 percent of earners accounting for more than a third of all unpaid federal taxes.”
That is stunning.
“The richest Americans are hiding more than 20 percent of their earnings from the Internal Revenue Service, according to a comprehensive new estimate of tax evasion, with the top 1 percent of earners accounting for more than a third of all unpaid federal taxes.”
Washington Post, March 26, 2021
Except at the higher levels it’s a matter of interpretation of what is and is not taxable, legal or not legal, using every vague part of the IRC or not. I bet if you look at the details of that report it will be very clear, if not then shame on the IRS. On the other hand, simply not reporting cash income or overstating deductions is quite another
Perhaps, I’m still looking. Much of this is from an NBER white paper, not peer reviewed, however, what it mainly refers to is unreported income.
“…, we find that under-reported income rises from about 7% of true income in the bottom 50% of the income distribution to 21% in the top 1%. Out of this 21%, about 6 percentage points correspond to sophisticated evasion that is seldom detected in random audits.”
“We stress that our estimates are likely to be conservative with regard to the overall amount of evasion at the top.”
I’m going with Senator Warren on this one.
Apropos of …everything… IMHO…
” …tax evasion also affects the measurement of wealth inequality.”
In what world does this inequality make sense? Its unsustainable, in my opinion.
The problem is weaponization of the IRS. The old bloated ineffective system could be revamped with better tech. What we don’t need is more agents (87K) learning to gun us down. I’d prefer a smaller federal government, their “investments” have not panned out for our benefit.
In my own business I pay what my accountant tells me to pay. She would be risking too much in an attempt to dodge taxes.
There will always be cheaters, however they usually get caught. Oh, except if they are a protected classDemocrat with clout.
No,Jeffrey, what we need is MORE IRS agents, so that more people will pay the taxes that they rightfully owe. No matter how you feel about government programs, they need to be paid for, and running up a huge deficit is not the way to do it.
Interestingly, I spoke with an IRS agent some years ago and asked him what would surprise me most regarding taxpayers. HE said the biggest area of “cheating” came from lower income citizens who claim that they have run a small, cash business, though they have not, in order to show enough income to qualify for the earned income tax credit. He said that this scam is rampant.
The IRS has 4,600 guns and five million rounds of ammunition according to a report from OpenTheBooks published in 2020. The Democrats passed $80 billion in additional funding to facilitate the hiring of 87,000 new agents and purchased $696,000 worth of ammo in 2022.
Remember this is for agents who are trying to catch tax cheats via paper. They should be buying band-aids for the paper cuts. Why do they need so many guns and ammo?
You don’t need 87,000 new agents to go after 735 billionaires in the US. The IRS should already be investing those returns files by CPA and lawyers who all try to understand the screw up tax code.
I have a pension of about $72K But my 401K is in six figures. Should I have to hire lawyers and CPAs to file my two 1099s every year? Are one of those new IRS agents going to come after me because I am a paper millionaire?
“Social media users are claiming that the Internal Revenue Service (IRS) is hiring 87,000 new armed IRS agents. This claim is false. The job listing being shared is for IRS Criminal Investigation Special Agents, and currently only about 2,100 special agents carry firearms, according to IRS’s Criminal Investigation (CI) department.”
“…CI hopes to be able to hire 300-350 Special Agents during the course of this entire fiscal year – and we lose between 150-175 agents every year to retirement and attrition,”
The 87,000 other new employees is over a ten year period.
“Last year, then-IRS Commissioner Charles Rettig told lawmakers that staffing has shrunk to 1970s levels and that the IRS would need to hire 52,000 people over the next six years just to maintain current staffing levels to replace those who retire or otherwise leave.”
Two can play the scare tactics game. I voted for Joe Biden, will vote for him again, if he runs. I would vote for Warren if I were in her state. But it is true, sometimes, I hear them make a statement and I say, “Damn, I wish you hadn’t said that .”