Yesterday, the Internal Revenue Service announced the creation of a new group that will spend its time chasing down wealthy taxpayers who attempt to shelter their earnings and assets from Uncle Sam's reach. Some people might think it's wrong to target high net worth individuals. They might argue that everyone should be treated equally by the IRS. I disagree. I think a new unit with this focus makes perfect sense.
Reuters provides a good description of the new unit:
The IRS unit, which started operations in recent months, is part of a broader effort at the agency to combat international tax evasion, and the unit will grow over time, IRS Commissioner Doug Shulman told a meeting of the American Institute of Certified Public Accountants.
"We will take a unified look at the entire web of business entities controlled by a high-wealth individual," Shulman told the meeting. "At least initially, we will be looking at individuals with tens of millions of dollars of assets or income."
The high-wealth unit will focus on trusts, real estate investments, privately held companies and other business entities controlled by rich individuals, Shulman said.
Clearly, most Americans have nothing to worry about. Rich tax dodgers, however, probably aren't pleased with this news.
So why should we make sure the rich are paying their taxes as the law dictates? Well, because it's what the law dictates. If the rich believe they are taxed unfairly, then that's an issue that needs to be taken up with state and local governments. It's not okay to cheat the system in order to satisfy that view. Laws should be enforced or repealed.
Moreover, the rich have a distinct advantage over everyone else in avoiding taxes: they have the money to hire unscrupulous sophisticated accountants who can figure out ways to escape paying the government what they actually owe. The average taxpayer doesn't. Without some extra effort to catch such shady activity, average Americans will pay the government what they owe, while the rich might manage to escape paying what they should be.
Finally, such a group makes sense from a business standpoint. Few probably think of the government as a business. But like a business, it has revenue -- taxes. The group of people that the new unit will target is responsible for the lion's share of tax revenue. If it can squeeze money more out of these individuals, then the return on investment for the cost of putting such a group together will likely far outweigh that of more staff for audits of average Americans who might try to avoid paying their full tax obligation.
Some might complain that this is a covert way for the Obama administration to start instituting its policy to go after multinationals. I wrote about this proposal back in September, saying that it wasn't truly about closing loopholes, but really about new taxes on business. I subsequently noted earlier this month that this legislative effort appears to have failed for the time being. I don't believe that this new unit would seek to, or have any authority to, enforce laws that don't exist. As a result, I see little harm in making sure current tax rules are followed.
What a waste. If i was truely rich i wouldnt stay in this country for two seconds and your sorry commy bastards wouldnt get anything from me, and thats exactly what you deserve, nothing.
If you had an annual income in the 10's of millions of dollars and the IRS tried to collect what you by law you would say "you sorry commy bastards wouldnt get anything from me, and thats exactly what you deserve, nothing.
I feel many people in this do not have an accurate grasp of history. This country has relatively low rates of taxation, especially when compared historically. Before Reagen it was what, 90 percent? Now its at, maybe, 35%.
I guess me and Joe are just different. If I was earning 10's of millions of dollars a year, I would happily pay my fair share of taxes to say thank you to the country that allowed me to do so. I guess me and Joe are just different.
A funny thing is that a lot of rich liberals in Congress disagree with you.
Have you ever heard any propose elimination of trusts, be which the rich escape inheritance taxes. The Kennedys don't bring it up. Kerry, married into inherited Heinz wealth, didn't propose it when he ran for Congress. Stinking rich Pelosi doesn't mention that. Why?
Those same rich liberals also support the Capitol Gains tax break for individuals. Could it be that they get a lot of income from cap gains? The vast majority of Americans don't get squat from cap gains.
How about Social Security? Ever hear Dem liberals propose that ALL income be subject to SS? You know, like interest, dividends and cap gains where those rich liberals in congress get most of their income. Or, how about removing all income limits on SS and then lowering the individual rate - giving the less well off a break, decreasing the cost of hiring lower level employees for companies, and greatly increasing the share paid by the wealthy? I don't hear the liberals in Congress mention that, or even any consideration of it.
Of course all the above would also effect their wealthy campaign contributors. Mr. super duper movie actor might see 15% of his 10 million pay for 1 movie disappear in SS taxes. Same for the rich Wall St, types.
Now, I think that's because rich liberals are total f--king hypocrites. If they were not, they'd consider things like the above.
You want to put it in some perspective though. Should someone who makes $10 million and who should pay $40 million in taxes find a way to avoid paying say, $2 million of that be chased any more aggressively than someone who makes $100K and should owe $40k of taxes and cheats to shave off $2k of that? Dollar wise it sounds like they should go after the high earner. But don't they go after the bank robber who took $4 grand the same as they go after the one who robbed the bank for $1 million?
Limited Government power.
If people think that the government can control anything properly without putting you into a spin they are completely wrong. Postal service- bankrupt, social security-bankrupt,and people want them to take over health care and so on and so on. Sounds like the IRS is positioning themselves for collestion so that when the country is totally broke from this HORRIBLE health care plan we can just tax the crap out of all the successful people in this country. GREAT IDEA!!! Doesn't sound like democracy it sounds like another form of government. Why don't you just pick one,you'll get close.
Paying taxes is an obvious necessity for Jails and police and fire and roads. But we are supporting government control. On our finances. And its not just the people that make 10's of millions of dollars a year. It's also the small business owner that makes 400,000 a year. He makes that much Because, he is successful.He started washing dishes when he was 14 and now he owns his own business and is doing great. And although he has three children two of which are in college and one on the way, a mortgage, his business and his volunteer work we should limit what he can make. PEOPLE WAKE UP! If you get the hair to own a small business or get your real estate license or whatever and you become successful you will subject to these rules and limitations. This is a lie that the government packages up nice and neat. This is their crazy ideology about distribution of wealth. If a man is successful in his business and he hires 1,000 people to work for him isnt that distribution of wealth. Successful people employing successful people. But NO, now we need to tax him down 15 or 30 more because he's to successful. We are hearing this chatter and swallowing happily. It's all bogus. And it threatens us all. There is always fine print. And they will not divulge that fine print and it will swing round and bite us all in the ass. It always does. We own the government people and the more power we give them the less we own.
Or, you know, instead of having a byzantine tax code that makes it easy for the wealthy to find loopholes and shelter their income, and then spending all this money creating crack IRS units to enforce the law where they couldn't do it before, we could streamline the tax code and create a system where compliance is easy and non-compliance is easy to monitor. Like, for example, a VAT. It's stupid to create ever-more-complicated tax laws that are basically full-employment programs for accoutnants and lawyers, and then spend even more money hiring IRS agents.
Before getting all giddy over a VAT, you should look at the compliance rates in VAT countries, the compliance costs, and the costs to collect and audit the VAT throughout the economy.
Bingo.
Also, there is a distinct difference between tax evasion and tax arbitrage (although most people fail to grap this difference). The government sure as hell doesn't; just because it takes significant resources ($ to pay trust lawyers/tax accountants) to take advantage of global tax arbitrage opportunities doesn't mean its something people should be punished for. There are TONS of loopholes and tax breaks that even people of modest means take advantage of every freaking day, they may not be as complicated or mysterious, but what's the difference?
How many small-to-medium business owners effectively use their corporate accounts/funds for what are essentially private goods/services, yet use them to reduce their taxable income (etc)?
The tax code needs to be 100% revamped, from the ground up. The IRS should be smaller, not bigger, and we should be ENCOURAGING the very wealthy to keep their money on-shore, rather than seeking to exploit tax arbitrage across the globe. Anyone who disagrees with these points needs to educate themselves, as the benefits of all three should be self evident.
We have a "byzantine" (I bet you couldn't name a single figure of the era- posuer) tax code because this country was founded on (gasp) principles that "All men are created equal". Which if you read anything about Thomas Jefferson will tell you that we each owe our fair share.
To the point of the article (and when I saw "The Rich" in the title I knew it was Mr. Indiviglio), the payment of taxes regardless of political leaning has never been in debate in this country.
What has been the debate is "how much" to pay. And given that "the rich" pay less in taxes (by percentage) now than at other time since the Gilded Age (for those that don't know 1920 - early 1930's), I really don't see what the argument is about anymore.
To the ed's point, no one will talk about the largest theft of of tax revenue, the so-called "death tax" paid only by the wealthiest 3% of the population.
'The Gilded Age' was a term coined by Mark Twain and Charles Warner referring to the era of industrialization and the excesses of the robber barons of that time, specifically 1870-1890.
Actually, it's also used to describe the era of excessive financial disparity of the 1920s and 1930s prior to the financial collaspe as well.
The IRS has now noticed that there is probably a whole lot of money being left out on the table out there that they could claim. It always seemed odd to me that the people that had the most ability to pay the IRS, were at the same time almost treated the most leniently.
I do feel that the impression is there that the super rich fill their tax returns with write offs and tax breaks and don’t really pay what they should. Now granted, I don’t know what the exact numbers are, but I do know what public perception is. Public perception certainly is that the super wealthy don’t pay the same percentage of their income back in taxes. It might have to do with the fact that they can hire the best accountants, but that certainly doesn’t make it right.
I have to applaud the IRS for this new enforcement unit, and hope that its actions go in line with the lofty goals that it has set. There really is no way that our government should be forced to cut spending on worthwhile efforts and programs, while these people are able to write off money that could be used to support the programs.
Check out my blog on the IRS's new unit and its approach at... http://www.thedebtgazette.com/2009/10/irs-enforcement-group-wealthy/
First of all, I am stunned, STUNNED, that you didn't use that greatest of imaginary quotations about selecting financial opportunities* in respect to this announcement. I don't know whether to congratulate you for avoiding the temptation or chide you for your snub of popular culture.
Secondly, while great parts of the tax code are, admittedly, more or less gifts to special interests its truly Byzantine nature really comes from its use as a tool of social policy implementation. The tax code punishes people who do things the government does not want them to do by taxing those things, and rewards them for doing things it does want them to do by reducing their taxes or even giving them outright bribes. Any attempt to reform tax policy must include a mandate to STOP DOING THAT. Otherwise the policy will very, very quickly degenerate right back to where it is now. And even if we manage to reduce the amount of outright pandering, the more complex the code is, the more ways people will find to avoid taxation and the greater the advantage relatively wealthier people will have in their attempts to do so.
*"Why do you rob banks?"
"Well, that's where the money is."