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FINANCE: Obama Nominees Aren’t the Only People Who Have Trouble Paying Taxes

By Te-Ping Chen | February 05, 2009, 7:00 am

image Since Tom Daschle beat a hasty retreat from his Cabinet nomination this week, it seems the noise over the Obama team’s tax woes has — at least temporarily — subsided. But lost in the Daschle-Tim Geithner-Nancy Killefer tax kerfuffle lies a greater issue still: tax avoidance isn’t exactly unusual.

According to the IRS, there’s an annual $300-billion difference between what taxpayers owe and what they actually pay. About two-thirds of that is accounted for by individual underreporting, while similar misreporting by corporations and the self-employed drain the U.S. Treasury of another $88 billion.

That’s a lot of change Uncle Sam hasn’t bothered to collect. Why? One reason is a slump in IRS staffing. Over the past decade, the number of agents that perform audits has dropped by over a third. Meanwhile in 2007, in what the Syracuse University-based Transactional Records Access Clearinghouse calls a “historic collapse,” only 26 percent of corporations holding at least $250 million in assets had their books inspected — compared to more than 70 percent in 1990. (The fact that Congress outsourced debt collection to private agencies in 2004, costing the government $37 million more than such agencies manage to collect, hasn’t helped either.)

As Congress continues to batten down the fiscal hatches, here’s something else to remember: For every dollar the government devotes to IRS enforcement, another five are recouped — a five-to-one return on investment. As Sen. Tom Carper, a Delaware Democrat, puts it, that’s some $300 billion in low-hanging fruit.

Next entry: TRANSPORTATION: New, Performance-Based Method of Divvying Up Funds at Risk
Previous entry: POLITICS: Obama Team’s Ethics Fumbles Shared by Others

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  1. Posted by: RazionalThinker on February 13, 2009, 10:42 am

    After this nomination fiasco with so many congressmen being deceptive on their taxes, part of the “new” budget should be geared to hired IRS auditors for a massive IRS audit of every congress representative. Any unpaid taxes should be made public.
    Also, any head of a big business getting rescue funds should be audited.  It is the well-informed who know how to hide or not claim assets.  The last paragraph of this article points out such an endeavor would reap innumerable profits!!!
    Can I take stock in this endeavor?  The return will pay more than my portfolio. OH yell..

  2. Posted by: gunste on February 13, 2009, 2:53 pm

    An under funded IRS should not be a surprise. Congress in its own interest and with the strong lobbying of business and the financial industry has always kept the IRS underfunded and exerted influence to minimize enforcement of violations of the voluntary compliance with the laws.

    The wealthy manage to evade taxes by a variety of means which are not available to the mass of citizen who elect to pay for the services which define a civilized society.

    The most recent publicity of failure to pay taxes, fraud in the financial industry are all a symptom of a decaying society.

  3. Posted by: RazionalThinker on February 13, 2009, 6:55 pm

    gunste, I soooo agree with you & it is on financing
    auditors that I would like to see some of this “newly” made money placed….. the monetary fines for fraud/neglect should be steep..very steep as Obama has a broken country to run.  It is definetly not of his doing that historically the racketeers (lobbyists & the finance industry) along with the advantaged wealthy have exploited all sense of doing the right thing because it is the right thing…instead, it’s a “they won’t catch me” kind of thing. So shameful.

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