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(Written by Greg Tarpinian, Executive Director of Change to Win, and crossposted on the CtW Connect blog)

Last month, the New York Times’ David Cay Johnston reported the extraordinary fact that, in 2005, the top 1 percent of Americans received their largest share of national income since 1928. Further, while total reported income in the U.S. increased almost 9 percent in 2005, average incomes for those in the bottom 90% actually fell as the income of those in the top 1 percent increased 14%.

But that gap is not enough for the Bush Administration.

Today’s New York Times Business section contains this startling headline: "I.R.S. Audits Middle Class More Often, More Quickly." The Times reports:

Since 2000 [the year Bush was elected], authorities at the Internal Revenue Service have nearly tripled audits of tax returns filed by people making $25,000 to $100,000 as part of a broad change in audit strategy.

For these 61 million individuals and married couples, who make up nearly half of all taxpayers, the odds of being audited rose from 1 in 377 to 1 in 140.

Tax revenue from enforcement actions rose from $33.8 billion in 2000 to $48.7 billion in 2006.

Now, I am all for everyone paying what they owe. But this comes from an Administration that not only forced through a massive tax cut for millionaires, but has dramatically reduced enforcement of every government law or regulation that might interfere with corporate profits or might protect workers.

Originally posted to ChangeToWin on Mon Apr 16, 2007 at 01:52 PM PDT.

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Comment Preferences

  •  truly one of the most anger inducing book (5+ / 0-)

    I have ever read is David Cay Johnson's book "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else

    read it...give it to your friends. it is truly astonishing

  •  Uh-oh (3+ / 0-)
    Recommended by:
    Sychotic1, Statusquomustgo, aludlam

    the odds of being audited rose from 1 in 377 to 1 in 140.

    I think I'll triple-check my return before I send it out tonight.

    •  Much of this is for small business owners (0+ / 0-)

      where - let's be honest - there's often lots of cash and opportunities to play games.....

      Of course the REALLY wealthy are playing even bigger games - but pay lawyers and accountants to make sure that they're in technical compliance.....  that costly alarm system is a business deduction because the home office needs to be protected.... cars are always leased by the business and expenses paid by it.... you can bet that almost all travel and entertainment is somehow business related as well......

      of course some are REALLY greedy and push the envelope - hence a few very visible tax fraud cases now and then - it gives the illusion of real enforcement..... but then some of these schemes are SO convoluted and blatantly pushing the envelope that they really deserve prosecution.

      but the really wealthy rarely get detailed audits.....   hell they're like Richardson - Reagan's budget chief.... they make up their own accounting rules and then scream that they're being persecuted when someone points out that they're not coming close to following commonly accepted practices........

      •  Yeah, but us teenie business owners get the shaft (0+ / 0-)

        because we can't afford the lawyers and CPAs, yet we're subject to the same 10,000 pages of tax code that International Paper is. We may get some benefits, but there's a huge cost in time and dollars for tax code compliance (federal and state). The truly abusive small businesses are those set up by the rich as lifestyle funders. Go take a look at the tax codes and search for "race horse". Rich and want a big ranch to vacation on? Go into the race horse business. Make a buck a year, spend 3 months a year there "managing the business" and you're set.

        At least I'm small enough to not have to worry about providing health care and having to deal with the rapacity of the health insurance sharks...

        •  But Republicans LOVE small business....... (0+ / 0-)

          you are the engine of the US economy....creating all those jobs......

          You aren't feeling the love?

          I know a few small business owners - body shop, repair place, plumber and others where the business had to be sold off to deal with estate taxes.... Somehow THAT legislation didn't protect those it was supposed to...... you NEEDED a high priced estate attorney to wade through all the regulations and too many just didn't - or couldn't - do so.

          But even the wealthy screw up...... our tax and regulatory environment os so convoluted and full of special provisions that NOBODY really understands any of it..... and woe to the person that thinks they have IRS approval on something only too have them change their position later......

  •  I suspect an additional reason (3+ / 0-)
    Recommended by:
    wenchacha, Sychotic1, Utahrd

    Regardless of white house policy decisions, the IRS likely goes after the middle class because they're on the peak of a recovery curve.

    The poor don't owe enough to make up the cost of an audit.

    The wealthy can afford lawyers to either fight or bargain down an audit (if they didn't already proof the return against a successful audit upon filing in the first place).

    The middle class represent the best ROI for the IRS.  I view the problem not just as Republicans giving more money away to the wealthy, but as a systemic problem on a more fundamental level of wealth in America.

  •  The game is rigged (2+ / 0-)
    Recommended by:
    Sychotic1, Statusquomustgo

    Estate tax changes benefitted the wealthiest 18 families in America

    The report says that those 18 families, worth a total of $185.5 billion, have financed and coordinated a 10-year effort to repeal the estate tax, a move that would collectively net them a windfall of $71.6 billion.  These families operate businesses such as Wal-Mart, Gallo wine, Campbell’s soup, and Mars Inc. (the maker of M&Ms.)

    Considering that even Warren Bufffett thinks inherited wealth is a BAD idea....... those that got it easy seem to be focused on holding onto it and grabbing even more - knowing that they sure couldn't EARN this kind of money on their own.... too bad though... in most families wealth lasts only three generations before it's squandered.....

    the solution seems to be accumulate even MORE money so later generations have their chance to blow it as well......

    What does this mean for the nation? Thirty years ago, the richest 1 percent owned less than a fifth of America’s wealth. Now, according to a recent report by the Fed Reserve Board, they own more than a third. Not since the days of the robber barons of the 19th century have we seen this much wealth concentrated in so few hands....

    The irony in all of this is that even a moderate amount of savings can make a HUGE difference to most people.  Having started with nothing - when even a blown tire could be a financial crisis, dw and I now - well into life (I'm over 50) finally have some breathing room.  But instead of spending up to our earnings - like so many others - we revel in the chance to make a difference with charitable efforts.  Yet some of the times when we are writing a nice size check, those at the same table worth so very much more settle for some cheap and empty gesture - usually something that gives immediate visibility at the least cost.  

    IMO, most of those that earn their own way appreciate what they've accomplished and ARE willing to share the wealth. A few realize that inherited money is a curse and refuse to make their children's way in life effortless.

    Those that inherit are CLUELESS as to how the world is and make every effort to hold onto what they have and get more - they're horribly worried that they may lose what they have - HORRORS! - and actually have to work for a living.......   God forbid - they would't have been born into all that money if God intended for them to work......

  •  The taxes on the middle class is (0+ / 0-)


    There has to be a more equitable way.

    Until the 1960's, corporations paid the same tax rates as individuals 25% to 30%. They now pay 10% to 15%.

    Things really must change.  

    and, I am double, double checking my returns before mailing too....

    statusquomustgo...and it did...whooooops, not done yet

    by Statusquomustgo on Mon Apr 16, 2007 at 02:17:22 PM PDT

    •  Tax competition (0+ / 0-)

      Due to tax competition, 10 to 15% is better than 0% on a corporation that has moved its corporate headquarters to the Cayman Islands.

      •  send investigators to Caymen Islands (1+ / 0-)
        Recommended by:

        if Companies do not actually run things from there. Add a whoping big fine to their tax bills, or remove then from being allowed to do any business in the United States.

        fact does not require fiction for balance

        by mollyd on Mon Apr 16, 2007 at 03:24:40 PM PDT

        [ Parent ]

        •  Run things! They don't even reside in them. (0+ / 0-)

          I've seen, with my own eyes, a shabby 2-story house on a remote deserted back street in Grand Cayman Island and it had a shingle hung from the side of the building with 4 or 5 names of big US consulting & accounting firms (I won't name any until I find the pic). The place was empty and only as big as a duplex at most anyway. It was a mailstop, a very lucrative tax dodging mailstop.

  •  har (0+ / 0-)

    yeah I owed for the first year ever. I didn't owe much (because I chose not to itemize...saved 500 bucks that way!) but still. I had plans for that money...postponed till summer now.

    However, if I had listened to the advice and put more money away into an IRA, I would have had my usual fat refund.

    so I am unsure if this is the IRS and its taxrates (which I consider more then fair for people, not so for corporations) or me not knowing the game or something.

    all Along the Watchtower...... blogroll

    by terrypinder on Mon Apr 16, 2007 at 02:45:48 PM PDT

  •  Taxes & immigration (0+ / 0-)

    This may explain some things

    If you can trust the Libertarians at Reason Magazine who quote from the Washington Post & the New York Times, more undocumented immigrants are paying taxes.

    They are doing so to prove how long they have been in the country and because of some proposals that would require them to pay back taxes.

    But then there's the lady who just likes paying taxes because she's grateful to live here, even if she could be deported.

    Undocumented immigrants tend to be at the lower end of the economic scale.  So it may appear that there are more poor people than in previous years.  But I think that more of them are paying taxes than before.

  •  NTEU has a nice site (0+ / 0-)

    that makes a good read - and takes on the issue of privatizing IRS debt collection. It also includes details  on the IRS response to the charges the NTEU is making against the IRS inequitable treatment of taxpayers. Details here.

  •  Is the middle class cheating the government (0+ / 0-)

    or is the government cheating itself?

    After the amount you could put into a 401k was raised to about $20,000 if you were close to retirement, we decided to save $3,000 by putting $20,000 in our 401k through payroll.  That wasn't the brightest thing we ever did.

    We did manage to put two thirds of that amount in the 401k by flashing the credit card.  Bad luck visited us with damaging storms and hospital co-pays.

    This year we aren't putting anything in, we are paying off the debt we ran up last year.  We owed almost exactly what we put in the 401k last year.

    When it comes time to take the money out of the 401k, we pay regular taxes on every penny we take out.  If it has doubled, then we will still pay taxes on every penny of it.  

    Anyway, we paid an average of 7.5% taxes on federal. Any money we make over that this year will be 15% according to my tax printout.  

    The point I am trying to make is those who make $20,000 more than we do, had no problems maxing out their 401ks.  That saved them $3,000 if they are middle class and in the 15% tax bracket and even more if they are in a higher tax bracket. If they are in the 28% bracket they save $$5,600.

    The main point is, the more money you make the less you have to cheat because you get 'deals', but when you are not in the upper middle class, then it is hard to take advantage of those deals, because you don't have the money.

    Maybe I should reword the question and ask if the middle class is cheating the government or is the government cheating us by offering deals we can't take advantage of?

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