Page 6
June 1, 2016
O PINION
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Most High Income Tax Cheats Don’t Get Caught
A cosmic tax gap
s am p izzigati
The folks working
for the federal gov-
ernment can do some
incredible things.
Over at NASA,
for instance, they’re
now putting the inishing touches
on the new James Webb Space Tele-
scope — an instrument The Wash-
ington Post says will be powerful
enough “to capture the heat signa-
ture of a bumblebee on the moon.”
Amazing. We can now spot a
bug in space.
So why can’t we spot people
who cheat on their taxes right here
in the US of A?
A great many people, the IRS
says in a new report, are stifing
Uncle Sam. Our federal “tax gap”
— the disconnect between what
taxpayers owe and what they even-
tually pay — is now averaging
$406 billion a year.
That eye-opening igure comes
from the 17 percent of taxpayers
who misreport their income and
underpay their taxes.
The other side of the coin is that
83 percent of Americans are pay-
by
ing their taxes, in full and on time.
If you make a typical American
income, you almost deinitely
fall within this 83 percent.
Actually, you don’t have
much choice. All wage and sal-
ary income — the overwhelm-
ing bulk of the income average
Americans receive — gets au-
tomatically reported to the IRS
and faces automatic withholding
from your paycheck.
Under this system, notes the
new study, only 1 percent of over-
all paycheck income goes under- or
unreported.
But some Americans — the na-
tion’s most afluent — don’t make
their money from wages and sala-
ries. They get the bulk of their in-
come instead from business proits,
rents, and the money they make
buying and selling assets.
Most of this income doesn’t get
automatically reported, so few of
these dollars ever face any with-
holding at all.
That wouldn’t matter all that
much if the IRS had plenty of
agents out in the ield doing in-
depth audits. But the IRS has been
losing staff. The tax agency had
50,400 full-time-equivalent en-
forcement staff available in 2010.
The 2016 igure: only 38,800.
With fewer watchdogs on the
job, almost a ifth of individual tax
due on capital gains and “partner-
ship” income is going uncollect-
ed. An even higher share of rents,
royalties, and “proprietor” income
— nearly two-thirds — is escaping
taxes.
went through earlier IRS raw data
and did just that.
Americans who make between
$500,000 and $1 million a year,
these two researchers found, mis-
report their income at triple the
rate of taxpayers making between
$30,000 and $50,000, and well
over double the rate of taxpayers
making $50,000 to $100,000.
The rich engaging in this cheat-
ing do get nabbed sometimes. This
May, for example, a federal judge
found that Texas tycoon Sam
Wyly engaged in “deceptive and
fraudulent actions” to avoid taxes
on over $1 billion of his assets.
But the Sam Wylys remain out-
liers. Most high-income tax cheats
don’t get caught. And that won’t
Americans who make between $500,000 and
$1 million a year, these two researchers found,
misreport their income at triple the rate of
taxpayers making between $30,000 and $50,000,
and well over double the rate of taxpayers making
$50,000 to $100,000.
How much of this tax cheating
involves big-time business people
and how much involves mom-and-
pop business operators? The IRS
doesn’t say. The agency doesn’t
break down the new tax evasion
data by taxpayer income class.
But eight years ago, economists
Andrew Johns and Joel Slemrod
One key point to keep in mind
here: We’re not talking about
loopholes in the tax code when
we talk about the “tax gap.” Loop-
holes let the deep-pocket set legal-
ly sidestep what otherwise would
be a signiicantly higher tax bill.
The IRS tax gap numbers only ap-
ply to outright illegal tax cheating.
change until Congress starts sub-
jecting the incomes of the awe-
somely afluent to the same re-
porting and withholding standards
that apply to the incomes of aver-
age Americans.
Sam Pizzigati is an Institute for
Policy Studies associate fellow.
Distributed by otherwords.org.
Running for Election was an Amazing Experience
Proud of
what we
accomplished
r oberta p hillip -r obbins
As most of you know I sus-
pended my campaign on Fri-
day (May 20) when it became
clear that while the outcome
of the race is still very close,
by
the tide is turning in Tawna San-
chez’s direction.
While we did not get the outcome
we wanted, I am proud of what we
accomplished.
I am grateful to each and every
one of you for join-
ing me in this race.
Together we built a
grassroots campaign
with hundreds of vol-
unteers, supporters,
he Law Oices of
Patrick John Sweeney, P.C.
Patrick John Sweeney
Attorney at Law
1549 SE Ladd, Portland, Oregon
Portland:
Hillsoboro:
Facsimile:
Email:
(503) 244-2080
(503) 244-2081
(503) 244-2084
Sweeney@PDXLawyer.com
old friends, new friends, and my
family.
To my husband, CJ; my daugh-
ter, Nina; my mom, my dad, and
my siblings, thank you for your
love and support.
I want to congratulate Tawna
for a spirited contest. She deep-
ly loves this community and has
dedicated many years to improv-
ing the lives of young people and
families.
In November, I launched this
campaign for House District 43
because I want to help every Ore-
gonian thrive. I want to address the
challenges facing our community,
including lack of affordable hous-
ing, creating more family-wage
jobs, prioritizing education, and
protecting the environment.
With your incredible support,
we knocked on thousands of
doors, walked hundreds of miles
Providing Insurance and Financial Services
Home Office, Bloomington, Illinois 61710
Ernest J. Hill, Jr. Agent
4946 N. Vancouver Avenue,
Portland, OR 97217
503 286 1103 Fax 503 286 1146
ernie.hill.h5mb@statefarm.com
24 Hour Good Neighbor Service R
State Farm R
in the district, and called thou-
sands more to learn about the is-
sues that matter to them.
I am grateful to the neighbors
who opened their homes to me
and shared what would help make
their lives better.
Campaigns such as this one are
full of sacriices. Missed meals
with family, long days, and late
nights on the phone.
Perhaps my greatest sacriice
came a couple of weeks ago when
I had to resign from my position
at Multnomah County in order to
continue with this race because of
a law prohibiting certain types of
public employees from running
for ofice.
There are already enough bar-
riers for working people, we must
address the policies that make it
dificult for public employees to
run and serve.
My work for our community is
not done, and I look forward to my
next chapter.
Again, thank you for all of your
support. It means the world to me
and my family.
Roberta Phillip-Robbins was a
candidate in the May 17 Primary
for state representative in House
District 43 of inner north and
northeast Portland.