Collecting owed taxes should be a priority
Monday, October 13, 2008 9:37 AM PDT
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Government officials have thrown caution to the wind in their attempts to arrest the slide in investor confidence and resulting meltdown in financial markets. This month’s $700 billion bailout for Wall Street followed an earlier $300 billion plan for the ailing housing market.
The overriding concern now is somehow stop the free fall, but at some point in the future, attention will have to be given the massive federal budget deficit these infusions of cash are raking up. That responsibility will fall to the next president, either Barack Obama or John McCain.
On that count, Sen. Tom Carper, D-Del., recently offered some advice on how the next occupant of the White House might begin trim the mounting national debt. It probably would be only slightly more palatable for taxpayers than tax increases. Carper says reducing the gap between taxes paid and taxes owed would be a good starting point, according to Associated Press writer Jim Abrams.
This size of so-called tax gap might surprise many Americans. When last estimated by the Internal Revenue Service in 2001, it amounted to $345 billion. It’s probably larger now. J. Russell George, treasury inspector general for tax administration, told Abrams that $345 billion would likely be “a low-ball estimate” today.
How could the IRS obtain those billions without trampling over law-abiding taxpayers? George told Abrams that more third-party reporting could increase compliance significantly. George noted that people subject to withholding from their employers report 99 percent of their income, compared to only about 68 percent of income by corporations and people who are self-employed. For those who are self-employed and paid in cash, the figure drops to 19 percent.
Abrams reported that other suggestions include:
• Withholding payments to federal contractors who don’t pay their taxes. According to the Government Accountability Office, government contractors owe more than $6 billion in unpaid taxes.
• Require financial institutions to report information about non-interest-bearing accounts, such as non-interest checking accounts.
• Match federal and state tax data.
• And, eliminate the law under which businesses need not report payments to closely held corporations.
The idea of cracking down on taxpayers to help pay for taxpayer-funded bailouts for reckless lenders may not set well with many Americans. But take note that the money the tax collectors would be going after is owed to the federal treasury by individuals, businesses and corporations that are not paying their full share.
El Gabilon wrote on Oct 13, 2008 3:33 PM:
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