U.S. back taxes enough to erase deficit

[lovuian]

http://feeds.bignewsnetwork.com/?sid=083b880e712c7c36

The U.S. government is stepping up efforts to recover delinquent taxes, as the amount has reached a point where it could pay off the deficit.

An Internal Revenue Service report took data from 2001 through the current year, showing as much as $400 billion will be uncollected, which would more than cover the Congressional Budget Office's $360 billion deficit estimate for 2006.

Because the IRS says every dollar spent going after tax cheaters brings in about $4 in revenue, President Bush wants a 2 percent increase in IRS enforcement funds next year.

Some key members of Congress want to go further, USA Today reported. Senate Budget Committee Chairman Judd Gregg, R-N.H., has raised the possibility of doubling the president's proposed increase.
more...

? why have they gone uncollected???

[Mithras61]

1. Re: ?why have they gone uncollected???

Probably because the IRS wastes so much time chasing down people with little or no money to fight back (taxpayers with <$100K in revenue make up the HUGE majority of their caseload). If they went after the people that are REALLY screwing the system, they'd be taking on W_rong's buddies...

[Warren Stupidity]

2. Uh the story is bullshit that's why.

In many cases there is nothing to collect, it is theoretical 400B. Also note that the collection cost is 25%. So to collect the theoretical 400B you have to spend a theoretical 100B, with a theoretical net of 300B. That won't cover the 360B deficit for this year. Even worse, the 400B represents 5 years of uncollected taxes, so if you collect it all this year, at a cost of 100B, net 300B you get nothing next year. Finally, 100B increase in IRS enforcement funds? Gosh that is a lot of IRS enforcement. A simpler way to increase tax revenue would be to increase taxes, like for example by undoing the stupid irresponsible tax cuts for the very wealthy. That would cost hardly anything to implement.

[RUMMYisFROSTED]

8. Beyond repeal.

Tack on a extra 50% on that top bracket. Progressively, of course. *POOF* All shortfalls disappear and UHC can become a reality. But that would be a different kind of wealth redistributrion and would anger the trust fund set.

[mom cat]

12. Bingo!

[dweller]

9. that's what it sounds like n/t

dp

[lagavulin]

3. Also, think about it this way....

The IRS has ample authority to garnish funds from employers or impose mandatory withholding on any reportable financial accounts. So it's unclear what 'uncollected' funds really means...is it people who are bankrupt and have no assets? Or is it disputed tax payments?

Most likely it's just people who don't bother to file taxes at all (of which there are undoubtedly hundreds of thousands, for various reasons, all of which probably don't offer much hope of recovering very much money or they would have been pursued long ago).

[stillcool]

4. sounds like Neil Bush may have thought this up...

take from debt column, and put in asset column..problem solved

[lovuian]

5. LOL!!! Creative Bookeeping!!!

That was good!!!

[Sadie5]

6. It's a great way

to screw the little guy out of a few owed bucks, while those in upper tax brackets enjoy even more tax breaks. If IRS dares to collect on the wealthiest look for Bush to cut their taxes even more.

[stillcool]

7. I read that book "Silverado" about his

involvement with the S&L debacle of the 80's...these people have played the same games so many times...it's got to be the inbreeding....

[grahamhgreen]

10. Looks like we're being prepped for privatization of tax collection...

[lovuian]

11. OMG!!! I bet your so right

:bounce:

[fshrink]

13. It is already privatized,

the Indian companies who process returns are private.

[happyslug]

14. Both a real and an unreal problem.

First, Under Reagan the IRS audit teams were dismantled. These teams had been in use for decades to audit large corporation and multi-millionaires. One IRS agent could NOT do the job you need a team. These teams could work on one business for years, but when they were done they generally found a lot of money that had NOT been taxed (They also went after Businesses most likely NOT to report income which meant they almost always found unreported money). Since the 1980s the IRS has wanted to reform these audit teams but Big Business never liked them and lobbied Congress to make sure such audit teams are NOT re-institute.

The second large group of Income Tax NOT collected is when there is no third party involvement in the transaction. For example when you pay your paper boy. It is generally in cash and if he meets the minimum income tax levels he has to pay income taxes on the money paid to him. Other people also do NOT report they income if it is paid in cash. Generally these are people working by themselves for another low income person. The biggest problem to get this money is to determine what if any money transacted in the form of Income. For decades the Policy was it was NOT worth trying to collect this income tax for you often had to spend $10 to get $1 in income. On the other hand the GOP always point that these poor people are NOT paying what they should be and thus force higher income people to pay more. Even among upper class people this argument does NOT go over well but among the GOP elite it sounds "good" so they keep repeating it without going into the details (and thus turn off Middle and Upper Income Voters in this issue).

Worse the far-rights desire for a National Sales Tax is attack on the ground that Tax complies declines the less you have a third party involved. Thus if you use a Credit Card, that Income is almost always reports, but if you use cash to an individual running a business and do not ask for a receipt, compliance for reporting for Income taxes decline almost 50%. It is WORSE for Sales taxes, which if no third party is involved and does NOT involve someone normally in such a business Compliance drops to less than 20% (And to less than 50% if the seller is the sole owner and seller in his or her business even if he or she is normally in the business).

Now how does the IRS get this non-compliance information? While one source are divorce settlements. While the customer often do not care if the money is reported to the IRS, a spouse seeking a settlement often threatens to turn in the other spouse unless a fair settlement is made (and often is and the IRS still does not get the money). The IRS also does test audits on subjects and finds the differences based on the difference between the money reported during the test-Audit and what was reported before the test audit (Through again this is NOT "proof" of extra money in the earlier period on the grounds the period the IRS audited might be a "gravy" time for the business, but after a while the IRS more or less determines it is statistically impossible that if the IRS is auditing a company, it does better than when the IRS is NOT auditing the Business, but again this is NOT proof and the IRS has to leave it go).

Notice the above two situation, one with a limited amount of money can return billions to the Treasury (i.e. audit terms for large businesses), the other excessive cost to collect less than is spent.

Now today, the IRS does two types of Audits, first a true audit based on a computer program developed over the years that picks out income tax forms of questionable truth, the Second a random audit to make sure the above program is getting most of the tax cheaters AND to put the fear of the IRS into most people so they report most if not all of their Income (The IRS also likes to go after high profile tax cheaters for they make headline news and thus reaches most tax payers).

If the purpose of the COngress is to reestablish the Audit teams, I am all for it. The Government needs all the money it is entitled to. If on the other hand it is just more money for individual audits to go after the little guy (the big push since Reagan) not worth the extra money. I do not need the IRS spending my tax dollars making sure minimum wage workers are rightfully take the Earned Income Credit (and big push among the GOP for over ten years, most people who take the EIC when they are NOT entitled to it by mistake NOT deception, often they are told to take it by the IRS itself, but the GOP hates the Earned Income Credit for it helps low income families to much but are more then willing to tie up IRS Audit Money to do EIC audits than to permit the IRS to select who they will audit, which tend to be higher income people where the IRS know by experience unreported Income is).

[bleedingheart]

16. How you doin happyslug?

haven't seen a post from you in a while...

[happyslug]

18. Behaving myself

Still helping my one neighbor trying to get her Bar up and running. Been closed since mid 2003 and she has till January 2007 to renew her liquor license. Her problem is a lack of money (and a long term memory problem from a bad auto accident in 2001). She fell behind in her utility payments and when her ex-husband came up he caused a fight in her Bar and then called the Utility Companies to shut off service to her place. He wanted part of her auto accident settlement, but the auto accident occurred AFTER he left her (Thus he is NOT legally entitled to any of it). The problem was she had invested it all in the Bar and had no extra cash to get the utility service back up. She has been shut down ever since. I have been helping her out but my financial possession is bad so I can NOT get a loan to help her.

NOW she owes a old fashion Hotel, so even with the Bar closed she could still get revenue by renting rooms. The problem is getting Tenants. Had some in 2004, but then I had another problem with the Gas Company that was NOT resolved till after they left. Finally this month I had SIX tenants move in (After almost a year of no Tenants). Fast or famine. I also have someone willing to buy the place and if I can get in contact with my neighbor the place by be sold by the end of the month (She has a legal confrontation while trying to run a non-alcohol related business and went into a deep depression, which is typical of her).

Yes, I have been busy trying to keep the place from being sold for Taxes and to keep the utilities on, but beside that I have been doing OK.

[negativenihil]

15. Things like this are why i really feel the tax system is out of date

Look, this may be an unpopular opinion, but i really do feel this way.

Anyway - I really do think it's time to ditch our current tax system in favor of something along the likes of a VAT. Basically, put a tax on things you buy (like a tv, furniture, etc) and leave food items and drugs untaxed.

You consume more nice things, you get taxed more.

You don't buy so many nice things, you get taxed less.

I don't know, this makes sense to me and seems like we could avoid wasting money on chasing people down to pay taxes.

[cally]

17. Isn't this a one time windfall?

Maybe I'm reading this wrong, but this seems to take care of the deficit for one year only. Once the back taxex are collected (which are based on uncollected revenues over many years) then the ongoing deficit remains.

This seems like a smokescreen to delay the need to raise taxes and close large corporate loopholes. I no longer use the word business loopholes because that implies the problem is small business. That's how the RW sells their tax cuts. Most don't want to raise taxes on the local small business but are concerned about corporate loopholes. We need to reframe the debate.