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Two Questions
IRS Bounty Hunters
I saw this article in a leading Swiss Newspaper. Understandably, this story has the bankers in Zurich on edge, again. The banner (Google translation):
Back in 2007 the IRS refined its program to pay for information leading
to a conviction for a tax fraud. The new rules allow for a payment of as
high as 30% of the taxes collect. The story in this paper is about one
case announced recently where an individual was paid $4.5mm after the
IRS collected $20mm from the tax cheater. Of interest to me is that the
guy doing the ratting was also the tax accountant for the cheat.
I pay a bunch in taxes and I hate it. It pisses me off when I (we) end
up paying more because there are folks cheating the system. I’m not at all sure how much anyone should be paying in taxes. My answer is that it’s not zero.
If you put those two thoughts together the notion that the IRS is now
paying big bucks for “tips” is probably not such a bad thing.
That said, I’m troubled by this. The IRS has turned the civilian
population into its enforcement division. Yes, some good may come from
this, but some bad will too. This has a whiff of vigilante-ism to it.
The IRS bounty rules only apply for settlements in excess of $2mm. So
your average, cabdriver, part-time tutor, waiter/bartender etc. need not
worry. I don’t think that will stop people from ratting out some small
fry (friends and neighbors included) who are dipping a bit with the IRS.
It certainly will create a cottage industry of PI’s, accountants,
lawyers who are going to start snooping. A $4 million payday brings lots
of slugs into the open.
I’m interested to read your thoughts. Like I suggested above; I go both ways on this one.
On that Tax Hike for the rich folks
I was looking at some IRS numbers on who pays taxes to the federal
government. This data is from 2008. That was a bad year to look at
incomes/taxes. There was a big drop in income due to the recession and
market crash. But it’s still useful to look at.
If we’re going to raise any significant amount of new revenue it will
have to come from the top 5% of earners. Note that in 2008 the top 5%
was anyone who made over $159k. That number has crept up in the last few
years. For 2012 the top 5% will be any household income that is in
excess of ~$170k. Depending on where you live and how big your family is
that is really not so much these days. But it is greater than the rest of the 95%, so that is where the new taxes will have to fall.
Note in 2008 the top 5% (a) earned 35% of all income, (b) paid $600 billion in taxes, (c) paid 59% of all taxes, and (d) the average tax rate was 21%.
I think the AGI revenue numbers are currently running at ~$9.2T (up 10%
since 2008). Assume that the effective tax rate is about the same. Now
let’s raise the taxes on this group of rich people. How much more
should they pay? How does a 50% increase strike you? Changes in
the tax code to limit deduction AND increase the top bracket that
resulted in an increase from 20% to 30% it would raise an additional
$325billion. With a 1.6 trillion deficit that extra money would come in
handy, but it only covers 20% of that shortfall.
If the tax rate(s) were to be adjusted so that the poor bastards who are
making over $170k get their taxes doubled from 2008 levels it would
still only raise $625b, leaving us with a hole of $1 trillion.
The effective tax rate would have to be raised on the entire top 5% to
75% in order to balance the budget. Put another way; if you were lucky
enough to earn $200k, your take home would only be $50k. And that number
does not include state taxes, property taxes or sales taxes. Basically,
you have nothing left.
If you think that the solution is to raise taxes BIG TIME on the
uber-rich, think again. The top 1% should have about $1.85T in income in
2012. IF we really sock it to them and nailed them at a 90% effective
rate we could cover 1.3T of the 1.6 shortfall. This would imply that the
top 1% would be paying 75% of all taxes collected.
I hope that this shows that raising taxes on wealthy Americans does not
work very well. Yes, we could technically go the route of Sweden and tax
income over $500k at 70% or so. But what might be the consequences?
Question: What should the federal rate on high-income earners be? What
rate would you apply to those making ¼ mil a year or more? ½ mil? A cool
mil?
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Bruce,
Right after graduating from university in 1998, I did a six month contract with the Criminal Investigations Division at Revenue Canada. My report was on ''estimating the size of white collar fraud in the Canadian economy,'' which is stupid because by definition you can't estimate what you can't measure. Anyways, two things struck me. If you cheat on your taxes in the US, they throw you in jail for 40 years! You're cooked! In Canada, back then at least, I saw people getting away with murder and then Revenue Canada would negotiate with them to get a percentage of the taxes owed. made me sick to my stomach knowing hard working professionals are paying huge taxes while these fraudsters were getting away with murder. So while people criticize the IRS -- and they're far from perfect -- at least they're effective in going after tax cheats. You call this vigilantism, I called it doing whatever is needed to incentivize people to call out tax cheats. We need more whistleblowers to stand up and if they get rewarded, so much the better.
no bud, the problem isn't tax cheats
the problem is an overspending outsized government that used to get by just fine with no income tax at all
Leo's post reminds of the Russian/Soviet boy who turned in his father to the government for hiding food from the authorities, only to be killed by local villagers, after which the government erected statues in his honor. Anybody remember the kid's name, or am I imagining something?
Bottom line is that tax cheaters are ripping off society. You call it pathetic to catch them, I call it justice.
Leo: It's not pathetic to catch tax cheaters. It's pathetic to offer their neighbors a bribe to dig up evidence of cheating. It's pathetic to call their services Justice or Treasury when banksters and Geithners are cheating their way into your turbo-hose-beast wet dreams. Bottom line is that it's pathetic to stand up for the biggest cheaters of all while lashing out at the man who steals bread to feed his starving family.
Bullshit. The cheaters are the tax spenders. There is no representation in the face of escalating taxation. Remove ALL government endorsements (taxes), let it die, clean it up, start it over. THEN, let's talk tax reform..
Sounds like you reeled in a few tax cheats.
sounds like this thread is exposing a bunch of progressive socialists
who think big government can cure all of societys ills if they just/ had/ enough/ other/ peoples/ money/
+1 Thatcher
You're pathetic!
Again, show us some good faith here Washington: how about making the tax code just a tad bit less complex and contradictory. And lets get the number of income earners who are legally exempt from any fed income tax liability well below 50%.
Aha, the crux of the matter.
It's not the tax rate, it's the tax code.
So will I come to love big brother like you someday?
Yes you will.
Join us Dewey, freedom is slavery.
War is Peace
Freedom is Slavery
Ignorance is Leo
Gratuitous. Still, I laughed out loud.
I'm not sure I understand the question. Do we need bounty hunters to take out corrupt judges, elected officials, bureaucrats, banksters,and lobbyists?
And, was there an 800 No. for donations?
Hello, IRS? I'd like to report your boss, the Secretary of the Treasury...
- - - - - -
If we’re going to raise any significant amount of new revenue it will have to come from the top 5% of earners.
Maybe. But can't we give smaller government a try...just once? Coming to the rescue with more tax revenue just encourages a corrupt, shitty system bent on centralized control of everything. Fuck that. Show us some good faith at least - that you (the government) aren't just in business for yourselves.
Also, don't forget that capital tends to flow to where it's welcome and stay where it's well treated. There may not be a lot of fantastic capital destinations right now but that niche won't stay unexploited for long...
Actually, Timmay collected his own bounty.
This melds perfectly with the fact that we are now a nation that puts our hands in our fellow citizen's pockets, our eyes on his movements and their business on our minds.
1984 wasn't a book, it was prophecy.
The next step is to criminalize those who don't report the "cheats".
20% across the board. The primary problem with our tax codes is that they allow loopholes for those who can afford expensive attorneys to exploit them to make out like bandits. No more "some animals are more equal than others."
Personally I think that should go for everything (enforcing laws, a whole melange of other stuff), but I'm trying to keep to the context of this article.
Typographical error. Decimal place was supposed to be one place to the left. Because... lol! the desire to give a full 1/5 of one's hard work to a corrupt, incompetent, bloated, self-serving and self-perpetuating government... LOL! it just has to be some kind of joke!
/slave-think
Well, I'll take a stab at this, Bruce. I disclose that I am likely more anti-.gov than average here at ZH.
It is clear that raising taxes will not bring in nearly enough. It's the spending! By whom? Those we elected. And promises we cannot keep. Mix in a bunch of banksters, and you now have a really TOXIC brew.
But, the REALLY RICH do not have a bad deal now. They are provided at least some security by government functions.
So my best reasonable suggestion would be to raise taxes ONLY those incomes over $1,000,000 / year, but raise them only to, say, 40%. No higher.
Of course, for me the ideal solution would be to eliminate the Income Tax as it is so intrusive on our privacy. That would mean savers would be rewarded, but the poor would take a hit. So, ridding us of the Income Tax will not happen. No way.
The "Really Rich" write the rules.
And the "Really Rich" (your term for them) will just stand there and take it up the ass? This may come as a shock to many, but the wealthiest folks can live wherever they please. If even a tiny fraction of them decide to emigrate, it will decimate the tax base and turn the burden on those "patriots" who remain on our golden shores.
My friend, who by the way brings good things to life, "Government Enterprises", aka GE, has done exactly that. They pay very little in taxes, yet create plenty of income. Employee scads of lawyers and accountants. Obviously BO could give a rip about this since he and Immelt dine frequently, so BO is quite comfortable giving the likes of GE a pass and shoving the whole shebang straight up the middle classes keister. wake up, folks.
Tell them not to let the door hit them in the ass. Taxes are much worse everywhere else, and more crowded. Go ahead, leave. I'll keep my house in Deer Valley, thanks.
Brave talk -- what are you going to say whem the taxman looks your way, citizen? Do you realize how many average Joes it takes to make up for the taxes paid by even one fat cat? If only 6% of the wealthiest Americans leave (about 60,000), taxes on those remaining would have to increase by 75%.
Go ahead and piss off the rich.
Rogerwilco:
Would you lick their boots to get them to stay?
That's Geithner's job.
Not all wealthy people are dishonest. For every Angelo Mozillo there are dozens of good people who pay a hell of a lot in income taxes. If you want to lump them all together and line 'em up at the guillotine, go right ahead. Just remember your head will fit in the same bloody basket.
This debate would be perfect for casual conversation on Jamie Dimon's 5th private Caribbean island. Hmm, shall I have a mojito or a martini?
Why not have both, and please don't forget to try the caviar, it certified organic and radiation free. Since the chances of most Americans making more than a million dollars a year in this rigged financial and regulatory system are nil, I really wouldn't have a problem going back to FDR's tax structure and also that Glass-Stegall idea wasn't half bad, prevented a Depression for nearly 70 years before Phil Gramm put a cap in its ass.
The problem is simple we have too much government and not enough taxes. Lets cut the government, say trim the military spending back to pre WWII levels and raise tax rates back to pre WWII levels. If the rich leave, fuck em. Money abhors a vacuum, the new rich will arise to take their places, its not like we couldn't have a self sustaining economy in America just by making and growing our own stuff here and selling it to each other. Fuck global trade, lets get rid of the corporations that are sucking this country dry and all the super rich cocksuckers who suck on the government tit, like big oil and Agribusiness.
Try the mohito and the martini...
shoot em, what's the point of having CIA hitmen if you don't use them
Fastest growing economy is the underground economy...no confidence in the system...is there any wonder why?
http://nakedempire2.blogspot.com/
FairTax.org
That is all.
+1
I agree, fair tax, flat tax I don't care. Dump this 19th century tax system.
There's a BIG difference between the Fair tax and the flat tax - with the fair tax, you can do away with the IRS, not so with the flat tax.
Do away with the IRS? No way. Somebody will still need to audit and enforce tax compliance.
And if the fair tax retains the 'prebate', you will still have to file to get the prebate, and the paperwork will go to the IRS, or whatever it's new acronym is - KGB, NKVD, MGB, OGPU, CIA, OSS, etc.
Dimes will get you dollars that any prebate quickly gets larded up with additions for extra children, and subtractions for too much income.
And with unemployment already at 9%, what are the unemployed "tax professionals" going to do? Go on welfare?
Go on a slightly different form of welfare? A couple years of unemployment benefits?
"I hope that this shows that raising taxes on wealthy Americans does not work very well. Yes, we could technically go the route of Sweden and tax income over $500k at 70% or so. But what might be the consequences?"
A country more like Sweden? Sounds good, just be sure to make everyone serve in the military, like they do in Sweden.
"I’m not at all sure how much anyone should be paying in taxes."
answer: 0 is how much anyone should pay in taxes. Taxation is theft and theft is morally wrong.
"The effective tax rate would have to be raised on the entire top 5% to 75% in order to balance the budget. Put another way; if you were lucky enough to earn $200k, your take home would only be $50k. And that number does not include state taxes, property taxes or sales taxes. Basically, you have nothing left."
This administration has argued that there is no correlation between tax rates and economic growth, so why not just raise the rate to 100% on everyone ???
Let's tighten up that military aspect to: Active duty combat units ie Infantry, Tankers, Engineers,Medics etc. Dirty hands in a war unit are busy hands. Milestones
Do we enforce immigration and the racial makeup to equal Sweden as well?
http://en.wikipedia.org/wiki/Demographics_of_Sweden#Sweden_household_cen...
Please! Let's do that...