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Old 26th March 2021, 03:49 PM   #1
Bob001
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The rich win again.

The rich are really good at hanging on to it.
Quote:
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.

That’s costing the federal government roughly $175 billion a year in revenue, according to the findings by a team of economists from academia and the IRS.
https://www.washingtonpost.com/busin...y-tax-evasion/

Quote:
In a remarkable 2019 analysis, the IRS estimated that Americans report on their taxes less than half of all income that is not subject to some form of third-party verification like a W-2. Billions of dollars in business profits, rent and royalties are hidden from the government each year. By contrast, more than 95% of wage income is reported.

Unreported income is the single largest reason that unpaid federal income taxes may amount to more than $600 billion this year and more than $7.5 trillion over the next decade. It is a truly staggering sum — more than half the projected federal deficit over the same period.
https://www.timesfreepress.com/news/...4-tril/543717/
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Old 26th March 2021, 04:04 PM   #2
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I listened to Bernie Sanders talking about this -- I'm a registered (moderate) Democrat -- and it really changed my thinking about Sanders and the basic inequality of US society.
Quote:
The IRS estimated that Americans report on their taxes less than half of all income that is not subject to some form of third-party verification like a W-2.
Sanders said think about it, if you're a wage earner (I am) you don't even see the money you owe in income tax. It's already been deducted when you get your pay check. Then, Sanders said, take a businessman like donald trump. He doesn't get a W-2, his income is self-reported. The IRS has people like that on the honor system. And guess what? The Republicans have engineered cuts in IRS budgets so that the agency no longer has much staff available to look a little more closely at self-reported returns even though IRS knows many of them are under-reporting income.

In 2019 I paid about six times more income tax than trump. It stinks, it really really stinks.

Last edited by newyorkguy; 26th March 2021 at 04:05 PM.
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Old 26th March 2021, 04:09 PM   #3
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It makes sense that most of the unpaid taxes are coming from the same group of people that pay most of the taxes to begin with.
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Old 26th March 2021, 04:12 PM   #4
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Originally Posted by newyorkguy View Post
I listened to Bernie Sanders talking about this -- I'm a registered (moderate) Democrat -- and it really changed my thinking about Sanders and the basic inequality of US society.


Sanders said think about it, if you're a wage earner (I am) you don't even see the money you owe in income tax. It's already been deducted when you get your pay check. Then, Sanders said, take a businessman like donald trump. He doesn't get a W-2, his income is self-reported. The IRS has people like that on the honor system. And guess what? The Republicans have engineered cuts in IRS budgets so that the agency no longer has much staff available to look a little more closely at self-reported returns even though IRS knows many of them are under-reporting income.

In 2019 I paid about six times more income tax than trump. It stinks, it really really stinks.
It takes a great deal of money, to be able to avoid paying out money as taxes
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Old 26th March 2021, 04:13 PM   #5
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Originally Posted by newyorkguy View Post
I listened to Bernie Sanders talking about this -- I'm a registered (moderate) Democrat -- and it really changed my thinking about Sanders and the basic inequality of US society.

Sanders said think about it, if you're a wage earner (I am) you don't even see the money you owe in income tax. It's already been deducted when you get your pay check. Then, Sanders said, take a businessman like donald trump. He doesn't get a W-2, his income is self-reported. The IRS has people like that on the honor system. And guess what? The Republicans have engineered cuts in IRS budgets so that the agency no longer has much staff available to look a little more closely at self-reported returns even though IRS knows many of them are under-reporting income.

In 2019 I paid about six times more income tax than trump. It stinks, it really really stinks.

Yeah, but he worked harder, right?

The second link has a simple solution: banks would be required to summarize account holders' financial transactions on a form comparable to the W2 and the 1099.
Quote:
Proposals to close this "tax gap" often focus on reversing the long-term decline in funding for the IRS, allowing the agency to hire more workers and audit more wealthy taxpayers. But Charles Rossotti, who led the IRS from 1997 to 2002, makes a compelling argument that such an approach is inadequate. Rossotti says that Congress needs to change the rules by creating a third-party verification system for business income, too.

The core of Rossotti's clever proposal is to obtain that information from banks. Under his plan, the government would require banks to produce an annual account statement totaling inflows and outflows, like the 1099 tax forms that investment firms must provide to their clients.
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Old 26th March 2021, 04:16 PM   #6
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Originally Posted by theprestige View Post
It makes sense that most of the unpaid taxes are coming from the same group of people that pay most of the taxes to begin with.
Because they're the richest. They've got the most money. You think it's okay that they cheat, or what?
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Old 26th March 2021, 04:23 PM   #7
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That sounds like an excellent idea.
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Rossotti says that Congress needs to change the rules by creating a third-party verification system for business income, too.
That's what Sanders was talking about. It's tough to get that kind of legislation past Republicans. What do you think all those corporate donations are for?
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Old 26th March 2021, 04:28 PM   #8
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I am one of those folks who does not get a W-2. Instead, all of my income is reported to the IRS not by me, but by my clients via 1099, 1098, and other IRS forms. This is not really self-reporting. I have no idea about Trump's taxes, but the folks that I know who I suspect of under reporting income are the people that I see getting paid under the table...
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Old 26th March 2021, 05:05 PM   #9
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Originally Posted by theprestige View Post
It makes sense that most of the unpaid taxes are coming from the same group of people that pay most of the taxes to begin with.
How does that even make sense? Both in accuracy and in logic.
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Old 27th March 2021, 12:31 PM   #10
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Originally Posted by Metullus View Post
I am one of those folks who does not get a W-2. Instead, all of my income is reported to the IRS not by me, but by my clients via 1099, 1098, and other IRS forms. This is not really self-reporting. I have no idea about Trump's taxes, but the folks that I know who I suspect of under reporting income are the people that I see getting paid under the table...

You don't say what your business is, but many businesses allow plenty of room to play with numbers regarding expenses and income. Trump Sr., for example, created a separate company to maintain his apartment buildings. The maintenance company charged the Trump company exorbitant fees and marked up the prices on parts and appliances, which reduced its net income and gave it grounds to increase its rents unfairly under the rent control laws. The NY Times published a detailed account of Trump evading hundreds of millions of dollars in taxes. The things Trump did are things pretty much anybody with money and a business can do.

Quote:
Donald J. Trump paid $750 in federal income taxes the year he won the presidency. In his first year in the White House, he paid another $750.

He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made.
https://www.nytimes.com/interactive/...ump-taxes.html
https://www.businessinsider.com/trum...on-2021-2?op=1

Last edited by Bob001; 27th March 2021 at 12:33 PM.
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Old 27th March 2021, 01:20 PM   #11
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Originally Posted by newyorkguy View Post
I listened to Bernie Sanders talking about this -- I'm a registered (moderate) Democrat -- and it really changed my thinking about Sanders and the basic inequality of US society.


Sanders said think about it, if you're a wage earner (I am) you don't even see the money you owe in income tax. It's already been deducted when you get your pay check. Then, Sanders said, take a businessman like donald trump. He doesn't get a W-2, his income is self-reported. The IRS has people like that on the honor system. And guess what? The Republicans have engineered cuts in IRS budgets so that the agency no longer has much staff available to look a little more closely at self-reported returns even though IRS knows many of them are under-reporting income.

In 2019 I paid about six times more income tax than trump. It stinks, it really really stinks.
Nothing new there. In fiscal 1972 my income was a bit under 4 thousand bucks. I paid more tax than Richard Nixon.
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Old 27th March 2021, 01:25 PM   #12
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Originally Posted by fishbob View Post
How does that even make sense? Both in accuracy and in logic.
Every demographic that pays taxes is going to include members of that demographic that don't pay taxes.

The US tax system is progressive. It divides taxpayers into demographics based on wealth, and requires a higher percentage of wealth in taxes from the wealthier demographics. So it makes sense that the wealthier demographics are paying the most taxes, as a raw dollar amount. It also makes sense that the people in those demographics who are dodging their taxes are dodging the most taxes, as a raw dollar amount.

The converse of this is that it wouldn't make sense if the lowest tax brackets were responsible for the largest amount of unpaid taxes, as a raw dollar amount. You see how that makes sense at least, right?
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Old 27th March 2021, 04:10 PM   #13
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Originally Posted by theprestige View Post
Every demographic that pays taxes is going to include members of that demographic that don't pay taxes.

The US tax system is progressive. It divides taxpayers into demographics based on wealth, and requires a higher percentage of wealth in taxes from the wealthier demographics. So it makes sense that the wealthier demographics are paying the most taxes, as a raw dollar amount. It also makes sense that the people in those demographics who are dodging their taxes are dodging the most taxes, as a raw dollar amount.

The converse of this is that it wouldn't make sense if the lowest tax brackets were responsible for the largest amount of unpaid taxes, as a raw dollar amount. You see how that makes sense at least, right?
So sure, rich people who steal are more likely to steal a lot than poor people who steal. That's partly just arithmetic, but also partly because, as noted above, the monitoring of rich people's income is less stringent.

So it's not just the amount that they steal, but the ease with which they do it.
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Old 27th March 2021, 05:03 PM   #14
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Originally Posted by Bob001 View Post
Because they're the richest. They've got the most money. You think it's okay that they cheat, or what?
I think it's a dog bites man story. Of course they cheat. The poor cheat. The middle class cheats. Everybody cheats, proportional to their circumstances.
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Old 27th March 2021, 05:10 PM   #15
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Originally Posted by theprestige View Post
I think it's a dog bites man story. Of course they cheat. The poor cheat. The middle class cheats. Everybody cheats, proportional to their circumstances.
I think you've missed the point. Tax evasion is made easier for the rich as they have income streams that are less verified by the IRS.

Yes, I'm sure poor people would do the same in (perhaps) approximately the same proportion, but it's apparently easier to do it when you're rich.

If it were a level playing field, I'd agree with your popint, but it's not, so I don't.
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Old 27th March 2021, 07:01 PM   #16
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Originally Posted by theprestige View Post
It makes sense that most of the unpaid taxes are coming from the same group of people that pay most of the taxes to begin with.
Originally Posted by Bob001 View Post
Because they're the richest. They've got the most money. You think it's okay that they cheat, or what?
Originally Posted by theprestige View Post
I think it's a dog bites man story. Of course they cheat. The poor cheat. The middle class cheats. Everybody cheats, proportional to their circumstances.
No. The rich cheat more proportionally. The top 1% have around 15% of the country's annual income but are responsible for more than 33% of its non-payment. Your defense of a system that is contrived to keep making the rich richer and the poor poorer is counterfactual.
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Old 27th March 2021, 07:18 PM   #17
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Originally Posted by Delvo View Post
No. The rich cheat more proportionally. The top 1% have around 15% of the country's annual income but are responsible for more than 33% of its non-payment. Your defense of a system that is contrived to keep making the rich richer and the poor poorer is counterfactual.
I'm not defending anything.
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Old 27th March 2021, 07:19 PM   #18
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Originally Posted by theprestige View Post
I think it's a dog bites man story. Of course they cheat. The poor cheat. The middle class cheats. Everybody cheats, proportional to their circumstances.
You missed the point entirely. People who work for wages don't have the opportunities to cheat that the wealthy do. That is largely a function of the tax code and the way it's enforced, and the writer suggests a practical solution that would bring in hundreds of billions of dollars per year.
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Old 27th March 2021, 07:28 PM   #19
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Originally Posted by theprestige View Post
I think it's a dog bites man story. Of course they cheat. The poor cheat. The middle class cheats. Everybody cheats, proportional to their circumstances.
What a load of crap. I've never cheated on my taxes or anything else. Well that's not precisely true. I cheated on a girlfriend once and felt guilty about it for a long time.

The everybody does it story is bs. The vast majority of people DO NOT CHEAT.
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Old 27th March 2021, 07:31 PM   #20
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Originally Posted by acbytesla View Post
What a load of crap. I've never cheated on my taxes or anything else. Well that's not precisely true. I cheated on a girlfriend once and felt guilty about it for a long time.

The everybody does it story is bs. The vast majority of people DO NOT CHEAT.
Context matters. What I meant was, every demographic has its share of cheaters.
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Old 27th March 2021, 07:42 PM   #21
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Originally Posted by theprestige View Post
Context matters. What I meant was, every demographic has its share of cheaters.
No, they ABSOLUTELY don't. Wage earners barely have a chance to cheat. Especially anyone who takes the standard deduction. Their taxes are automatically withheld. The average schmoe usually gets a refund because the government already has their money.

I also believe it is patriotic to pay taxes. I'm contributing to my country. It's how we serve our country.
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Old 27th March 2021, 08:30 PM   #22
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Bernie Sanders point was -- and I happen to agree with him -- it's the system that cheats. The wealthy are on the honor system. Charles Rossotti, who led the IRS from 1997 to 2002, has proposed Congress creating a third-party verification system for individuals whose personal income is derived from business ownership. The Republicans want no part of that. There have been proposals to beef up the section of IRS that audits wealthy individuals. The Republicans fight that too. In fact, under the guise of 'streamlining government,' it was the Republicans who cut the IRS staff to begin with. What do you think all the wealthy Republican donors ask for privately? Think this all just happened by chance? Pure luck?

The IRS estimates that wealthy business owners underpay their income tax by $175 billion a year. Refusing to go to a third party verification system, allowing the IRS to remain understaffed, amounts to a $175 billion tax break to the wealthy.

Don't expect the poster trying to hand wave all this away to get into an actual discussion about it. He's reciting a collection of 'talking points,' and when those are used up he'll disappear.
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Old 27th March 2021, 09:07 PM   #23
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Originally Posted by acbytesla View Post
No, they ABSOLUTELY don't. Wage earners barely have a chance to cheat. Especially anyone who takes the standard deduction. Their taxes are automatically withheld. The average schmoe usually gets a refund because the government already has their money.
Already addressed. They may not cheat on their taxes, but they do cheat on other things.

Quote:
I also believe it is patriotic to pay taxes. I'm contributing to my country. It's how we serve our country.
Rebutting an argument nobody was making, okay. Do you want a cookie? A patriotic cookie decorated with red white and blue frosting, that plays the Star Spangled Banner when you bite into it?
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Old 27th March 2021, 09:11 PM   #24
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it's a good answer to those who insist that only time in the military is serving the country, though service is everywhere from voting to taxes with military not all that important.
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Old 27th March 2021, 09:38 PM   #25
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Originally Posted by theprestige View Post
Already addressed. They may not cheat on their taxes, but they do cheat on other things.
BS. You, not me said "everybody cheats". I don't buy this. AT ALL. I believe most people are honorable. They don't cheat on their taxes, they don't cheat on their spouses. They make a deal with someone, they honor the bargain.

The message was pure false equivalency. Giving a pass to those that do cheat. I think that is the wrong message. It's a message we should never send. It's Trump's message. Get away with what you can. It's the least patriotic and honorable idea and diminishes our society.
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Old 27th March 2021, 10:11 PM   #26
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Originally Posted by theprestige View Post
Already addressed. They may not cheat on their taxes, but they do cheat on other things.

But this discussion was not about other things. The subject is taxes, and the manner in which the structure favors the rich. A point you appear to have missed the first time, and now appear to be sidestepping.
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Old 27th March 2021, 10:31 PM   #27
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Don't have an argument against it. Not sure what plan will most efficiently target and enforce this. Anyone here hired forensic accountants? They are quite expensive. The additional revenue should offset this, but it would seem the penalties would have to also increase.

Society might be moving towards lowering penalties in certain areas of crime, but financial crime should for sure be increased, and proportional to both the size of the infringement and the intent of how it was done. Laws are pushed back against when they can be targeted to any specific group, and examples of mistakes that ruin lives are easy talking points to negate any advance in stiffer penalties.

Hit he whole stream of lawbreakers in a transaction too. Company/owner/accountant/lawyer. No buck passing or 'I didn't know' nonsense that spooks prosecutors that want their win % to remain high.
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Old 28th March 2021, 12:59 AM   #28
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Originally Posted by rdwight View Post
Laws are pushed back against when they can be targeted to any specific group, and examples of mistakes that ruin lives are easy talking points to negate any advance in stiffer penalties.

Hit he whole stream of lawbreakers in a transaction too. Company/owner/accountant/lawyer. No buck passing or 'I didn't know' nonsense that spooks prosecutors that want their win % to remain high.
Those two statements seem contradictory to me. It is reasonable to go after all who are actively involved in a tax evasion scheme or who negligently fail to apply due process but I don't see how that would apply to share holders, accountants who are acting in good faith or lawyers whose only crime is to look for tax loop holes.
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Old 28th March 2021, 02:03 AM   #29
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Originally Posted by rdwight View Post
Don't have an argument against it. Not sure what plan will most efficiently target and enforce this. Anyone here hired forensic accountants? They are quite expensive. The additional revenue should offset this, but it would seem the penalties would have to also
....
If the income and outgo from business accounts were reported to the IRS by the banks, you wouldn't need forensic accountants. The IRS would compare the reports from the banks to the returns filed by the businesses. The proposed reports would be comparable to the W2s filed for wage-earners and the 1099s filed for investors. Cheating would be as hard for businesses as it is for wage earners -- still possible, but much harder.

Last edited by Bob001; 28th March 2021 at 02:53 AM.
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Old 28th March 2021, 06:52 AM   #30
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Below are quotes from, and a link to, a New York Times editorial on the subject. It was published one week ago. In the editorial the Times calls the logic for the idea of requiring third party verification on ALL income tax returns to be "overwhelming."
Quote:
The withholding system remains the cornerstone of income taxation, effectively preventing Americans from lying about wage income. Employers submit an annual W-2 report on the wages paid to each worker, making it hard to fudge the numbers. But the burden of taxation is increasingly warped because the government has no comparable system for verifying income from businesses. The result is that most wage earners pay their fair share while many business owners engage in blatant fraud at public expense...The government has a basic obligation to enforce the law and to crack down on this epidemic of tax fraud. The failure to do so means that the burden of paying for public services falls more heavily on wage earners than on business owners, exacerbating economic inequality.

Congressional Republicans, unable to muster public support for reductions in federal spending, have pursued that goal indirectly by constraining federal revenue, in part by hacking away at the I.R.S.’s budget. The share of all tax returns subject to an audit declined by 46 percent from 2010 to 2018, according to the Congressional Budget Office. For millionaires, the decline in the audit rate was 61 percent. Today, the government employs fewer people to track down deadbeats than at any time since the 1950s. Times editorial
As an example of how this could work, the Times cited legislation passed by Congress in 1986. It required taxpayers list a Social Security number for each person claimed as a dependent. That requirement "caused a sharp drop in fraud. The next year, seven million children abruptly disappeared from tax returns."
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Old 28th March 2021, 07:08 AM   #31
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I would add that though I'm not a wage earner, as an individual my bank and brokerage accounts all send statements to the IRS. Of course it might be possible to cheat and do stuff under the table, and no taxes are withheld, but I am pretty much obligated to match what the statements say.

And by the way, despite the prestige's assertion, although it may be true that cheating occurs at all levels, it is not true that everybody cheats. Some of us don't. My reasons may not be righteous, and have more to do with peace of mind and a desire to appear more righteous than I am, but the fact remains that not everyone cheats.
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Old 28th March 2021, 08:46 AM   #32
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Originally Posted by acbytesla View Post
BS. You, not me said "everybody cheats". I don't buy this. AT ALL.
What he actually said was,

Quote:
I'm sure poor people would do the same in (perhaps) approximately the same proportion, but it's apparently easier to do it when you're rich.
So his argument is that poor people would do it (in 'approximately the same proportion') if it was as easy for them to do it. But there are so many weasel words in there it makes his argument essentially worthless. 'Perhaps' poor people would not do it in 'approximately the same proportion'.

It stands to reason that rich people would cheat more, not because they are supposed to pay more but because that's how you get rich. Then you use your money to influence government into getting laws passed that make it 'not cheating' - the ultimate cheat!
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Old 28th March 2021, 09:57 AM   #33
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Originally Posted by psionl0 View Post
Those two statements seem contradictory to me. It is reasonable to go after all who are actively involved in a tax evasion scheme or who negligently fail to apply due process but I don't see how that would apply to share holders, accountants who are acting in good faith or lawyers whose only crime is to look for tax loop holes.
You figure it goes like this

The IRS could spend its resources chasing down 25000 low-income tax evaders to garner $10mil extra revenue.

Or it could go after 250 high-income cheaters for the same reward.

This is why this is all significant. What's more important? Busting a lot of people? Or getting the revenue?

If you think the priority should be to get the money owed to the government, then take plan b. If you think the priority should be to penalize as many people as possible and teach them a lesson, it's plan a.
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Old 28th March 2021, 10:16 AM   #34
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Originally Posted by pgwenthold View Post
You figure it goes like this

The IRS could spend its resources chasing down 25000 low-income tax evaders to garner $10mil extra revenue.

Or it could go after 250 high-income cheaters for the same reward.

This is why this is all significant. What's more important? Busting a lot of people? Or getting the revenue?

If you think the priority should be to get the money owed to the government, then take plan b. If you think the priority should be to penalize as many people as possible and teach them a lesson, it's plan a.
I don't know how this addresses my post. Are you arguing that we should penalize all companies, owners, accountants and lawyers regardless of whether any of them have done anything wrong?
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Old 28th March 2021, 10:25 AM   #35
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Originally Posted by psionl0 View Post
I don't know how this addresses my post. Are you arguing that we should penalize all companies, owners, accountants and lawyers regardless of whether any of them have done anything wrong?
What? Nobody is saying anything like this. The argument is that if businesses were subject to the same reporting requirements as wage-earners and investors, cheating would be much less likely because it would be much more difficult and the chances of getting caught would be much higher. How do you turn that into "penalizing everybody regardless of whether they did anything wrong?" Businesses who file honest returns, like the vast majority of wage-earners, won't have any problems, and it would be easier to focus enforcement on the small percentage who do try to evade their taxes.

Last edited by Bob001; 28th March 2021 at 10:27 AM.
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Old 28th March 2021, 10:40 AM   #36
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Not sure I'm following the logic here.

Yes, the wealthy don't get W-2s. But if you are actually wealthy, money is easy to trace in terms of large amounts being moved through banking (assuming we are not talking about bricks of cash in large dealings). Employee taxes being paid, utilities for brick-and -mortars, credit card statements. There is a massive and complex web of paper trails to make it near impossible to hide large income.

Small self employed people, OTOH, can make virtuly everything disappear, because the totals fall in the noise range, compared to big biz. A lot of businesses in my little beach town are cash-only, or run two registers to make money disappear. It doesn't scale upward after a point, though. Easy to hide $10,000 in undeclared profit. Tough to account for a mil disappearing.

Isn't big biz ducking taxes far more about abusing tax law, ie treating actual profit as business expense, hence deductable?
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Last edited by Thermal; 28th March 2021 at 10:42 AM.
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Old 28th March 2021, 10:53 AM   #37
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Originally Posted by Thermal View Post
Not sure I'm following the logic here.

Yes, the wealthy don't get W-2s. But if you are actually wealthy, money is easy to trace in terms of large amounts being moved through banking (assuming we are not talking about bricks of cash in large dealings). Employee taxes being paid, utilities for brick-and -mortars, credit card statements. There is a massive and complex web of paper trails to make it near impossible to hide large income.
.....

Sure, those records exist, but an investigation requires pulling all those scattered records together, after first figuring out where to look for them. The IRS doesn't get them as a matter of course. The proposal is that banks would routinely provide a comprehensive summary of account-holders transactions to the IRS comparable to the W2 and 1099 forms that wage-earners and investors get.
Quote:
Proposals to close this "tax gap" often focus on reversing the long-term decline in funding for the IRS, allowing the agency to hire more workers and audit more wealthy taxpayers. But Charles Rossotti, who led the IRS from 1997 to 2002, makes a compelling argument that such an approach is inadequate. Rossotti says that Congress needs to change the rules by creating a third-party verification system for business income, too.

The core of Rossotti's clever proposal is to obtain that information from banks. Under his plan, the government would require banks to produce an annual account statement totaling inflows and outflows, like the 1099 tax forms that investment firms must provide to their clients.
https://www.timesfreepress.com/news/...4-tril/543717/

Sure, a cash business can find ways to hide the cash, although in our increasingly cashless society that is getting harder even for pizza shops and hairdressers. But anybody who uses the banking system, like most businesses, would not be able to get away with just reporting their own numbers to the IRS.
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Old 28th March 2021, 11:03 AM   #38
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Originally Posted by Bob001 View Post
Sure, those records exist, but an investigation requires pulling all those scattered records together, after first figuring out where to look for them. The IRS doesn't get them as a matter of course. The proposal is that banks would routinely provide a comprehensive summary of account-holders transactions to the IRS comparable to the W2 and 1099 forms that wage-earners and investors get.

https://www.timesfreepress.com/news/...4-tril/543717/

Sure, a cash business can find ways to hide the cash, although in our increasingly cashless society that is getting harder even for pizza shops and hairdressers. But anybody who uses the banking system, like most businesses, would not be able to get away with just reporting their own numbers to the IRS.

That is if the IRS does a thorough audit. And never forget that businesses also have business expenses that they can and do deduct. They can over-report those. There are so many ways they can fudge.
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Old 28th March 2021, 11:08 AM   #39
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Originally Posted by Thermal View Post
Not sure I'm following the logic here.

Yes, the wealthy don't get W-2s. But if you are actually wealthy, money is easy to trace in terms of large amounts being moved through banking (assuming we are not talking about bricks of cash in large dealings). Employee taxes being paid, utilities for brick-and -mortars, credit card statements. There is a massive and complex web of paper trails to make it near impossible to hide large income.
This is what accountants are for. There are ways to hide the money and they do.
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Old 28th March 2021, 11:13 AM   #40
Thermal
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Originally Posted by acbytesla View Post
This is what accountants are for. There are ways to hide the money and they do.
And accountants assume legal responsibility for signing off. They have to plus or minus stay between the lines or they lose their license right pronto. Seems to me the Lions share of wiggle room is in classifying what is a legit write-off versus calling a convention in Vegas full of hookers and blow a legit business expense.
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