| (Pew Research) | Seventy-nine percent say cheating on taxes is wrong. The other twenty-one percent laugh as they walk into their executive boardrooms and Congressional offices (news.yahoo.com) | 54 |
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| More: Interesting | ||||

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Yay! Tax thread!
First off, a side note: Bear Stearns is done, gone kaput, finished. The @29B loan (originally $30B, but JPMC is buying the stock at 5 times the original price) will go to JP Morgan Chase, for the purpose of buying the rubble from the collapse. This is all subject to change, of course, because a class action suit has been filed to challenge the purchase offer, and so the collapse will only get worse while Bear Stearns's debt portfolio is in limbo
That said, the US 'tax gap' is a self-perpetuating problem. As the number of uncollected dollars goes up, the number of people who rightfully feel screwed will only rise, and the number of people whose personal indignation levels reach the tipping point goes up, leading to more uncollected dollars and around we go.
In an asymptotic way, though, the problem can be fixed. In theory, with sufficient time, money, and legislative action, a system could be created that would account for every dollar. Such a system would not be the kind of place any American wshould tolerate living in, though, as it would mean the end of cash and the tracking of every transaction. Backing off from the 100% pipe dream, though, there are a couple things that can be done at a basic level to bring the number down.
First, there needs to be a recognition that the purpose of the tax law is to collect revenue for the government. Much of the complexity which makes the tax code so dense to the average reader is the large number of provisions, including some very popular credits(EITC, Hybrid Vehicle) and deductions(Classroom supplies purchased by K-12 teachers) that use the tax code as an instrument of social policy. Hiding an expenditure by pretending you are 'generously' not taking the money in is pure financial chicanery. The issue of progressivity in the rate schedule has a financial component to it as well as a moral one, so I leave that one alone.Second, the Department of the Treasury in general, and the IRS in specific, needs to be treated as a revenue center in the budget process rather than a cost center. At the current level of enforcement, a dollar spent returns 8 or 9, depending on which year you are looking at. The problem is, of course, that fully trained Revenue Officers and Revenue Agents don't appear out of thin air when you throw money at the IRS. They take years to get up to speed, and any time frame longer than the election cycle in the House might as well be forever as far as political will is concerned.Finally, to those saying 'kill the IRS' etcetera, you have been fooled. The IRS is a bureaucracy. It has a set of rules that it follows, like every other bureaucracy. These rules are designed to collect money and information, and so the net result of the IRS following those rules is the collection of money and information. If you think long enough, you will find great comfort in the fact that the IRS as an entity has no emotional investment in you or your money. What Congress says, the IRS does. Much like a fiscal Zaphod Beeblebrox, the IRS is a very easy public focus for tax-related ire, but the IRS does not set tax rates, or penalty rates, or even interest rates. It administers the law that our duly elected Congress sets down. When this upsets people, you have 1998 all over again.